Jun 28, 2021
What is Know Your Business (KYB) and its relation to KYC
Know Your Business (KYB) process is not so different from the most widely known and standardized Know Your Customer (KYC) process. The difference lies in the purpose and intentionality of the process, focused on identifying companies and suppliers in the first case and consumers or customers in the second one.
In this article, we will try to define and explain what Know Your Business is and its relation to KYC and eKYC concepts.
What do Know Your Customer and eKYC mean?
It is a process that tries to fight money laundering, terrorist financing, tax crimes and phishing by registering a user as a customer of a company.
When KYC process is digitized, we talk about eKYC (electronic Know Your Customer). Processes digitalization in all industries has achieved to boost productivity, diminish costs, eliminate bureaucracy and reduce waiting times from weeks to minutes.
AML5 or (5AMLD), together with eIDAS, sets the digitalization of KYC processes and grants legal guarantees and total security to carry out client digital onboarding processes in a secure way and with a high level of trust.
Download this free guide on AML5 and eIDAS to take advantage of the digitalization of the KYC process.
What does Know Your Business (KYB) really mean?
KYB (Know Your Business) process shares all the features we have seen in defining KYC process. The difference lies in the user to identify: While in the standard process potential clients or users are identified to register them in a company, Know Your Business process is the one in which the person responsible or legal representative of a business is identified.
Most B2B (Business-to-Business) companies need to carry out due diligence to identify the businesses they work with and fight money laundering and other tax crimes, in addition to ensuring that they work with organizations with security and guarantees. Even so, in the great majority of occasions, as in the financial sector, it is a mandatory requirement of legal compliance.
Companies that, for example, offer professional services to other companies or those that constantly work with SMEs and freelancers must establish KYB procedures to identify the legal representatives of these businesses and verify their connection with the client company.
As with the KYC process, digital solutions in KYB help reduce costs, eliminate bureaucracy and develop control methods that are safer and more reliable than traditional identification methods.
KYB and the Business-to-Business environment
The use of the KYB (Know Your Business) term, or BKYC (Business Know Your Customer), is relatively recent. The demand for these types of solutions has skyrocketed due to the announcement of various regulations in many states around the world that force its implementation.
As a result, digitalization of processes and delocalization of them has caused that companies that offer products and services to or after companies (B2B) need to establish Know Your Business procedures. They need to reduce costs and times, administrative procedures and simplify previously tedious and complex processes, while ensuring that relations with their B2B clients are protected and have adequate legal support, also developing internal compliance policies broader regarding relationships with customers and suppliers.
eID, Know Your Business (KYB) reference partner
Electronic IDentification develops innovative digital identification solutions supported by artificial intelligence and machine learning. As a RegTech provider of technological solutions, eID accompanies dozens of companies from all sectors in their KYB and KYC processes.
VideoID, a unique technology in the market, which meets the security requirements demanded by AML5 and eIDAS, is presented as the market-leading digital IDentification and Video-onboarding standard. An agile, simple and totally digital solution that is equivalent to face-to-face identification.
If you are interested in knowing how to make your onboarding and KYC process go from 3 weeks to 3 minutes, download this guide.