Corporate KYC: How to Verify and Onboard Businesses

corporate KYC

What is Corporate KYC?

Corporate KYC, also known as KYC of Company, is the process of screening a business or corporate body and its beneficiary owners for AML/KYC compliance. This blog article will teach you about KYC Requirements for Corporates, the Corporate KYC process, what information a corporate client must submit, and how corporate KYC procedures may be automated using simple technologies.

Why is Corporate KYC important?

During client onboarding, it is critical to understand who your customer is in order to detect any possible hazards they may offer in a business partnership. The worldwide community has been broadening the scope of KYC requirements in order to combat money laundering, financial crime, and other illicit activities, requiring banks and companies to comply with new standards that are more strict than ever before. This information is often found on company registration paperwork, which are frequently available online. If corporate KYC becomes too time-consuming, you might hire a corporate KYC service.

Corporate KYC: The Challenges

Individual KYC procedures are less extensive, complicated, and expensive than corporate KYC procedures. The following are some of the most significant problems involved with the corporate KYC process:  

Poor Data

When attempting to verify a corporate customer’s KYC information in another jurisdiction, any financial institution will encounter errors and inconsistencies in company registration records and filing histories. Because financial organisations rely on data to make decisions, erroneous data may be harmful.

Positive Errors

When investigating a false positive, regulated enterprises incur significant costs, even though such inquiries are typically unwarranted. Firms face harsh fines from the regulation if they fail to do rigorous PEP and sanctions screening (even if the screening is a false positive).

Onboarding is time-consuming and generally manual.

The real money and resources required to screen potential customers prior to user onboarding are a constant source of worry for financial institutions and businesses adopting corporate KYC. Because of the time and effort required, the onboarding institution and potential client may abandon the project, or the business client may opt not to onboard.

Constant monitoring

After a consumer is onboarded, the corporate KYC problems persist. Firm structures, ownership, and commercial interests are all subject to change. As a result, a business that successfully completed a KYC check during onboarding may not be compliant in the future. Because of the ever-changing nature of AML/CTF regulation throughout the world, banking, financial services, and insurance (BFSIs) may need to reclassify existing customers who were previously deemed low-risk.

KYC Requirements for Corporates

What are the required documents for Corporate KYC? 

The most crucial papers that a firm must supply during corporate KYC are as follows:

  • Tax identification numbers
  • Beneficiary information (passport, government-issued IDs, etc.)
  • Trustees’ List
  • Copy of the incorporation certificate
  • Bank statements and income tax returns

However, keep in mind that KYC procedures differ based on the nation and business. The financial industry, for example, is the most stringent, requiring adequate authentication and a slew of documentation. The telecommunications business, on the other hand, has more permissive regulations while still adhering to regulatory norms. However, you must typically confirm that the company is lawfully registered.

What information do customers need to share?

Beneficiaries may be needed to give personal information such as a passport number or an ID card in addition to company registration paperwork and tax numbers. However, it is critical not to put undue strain on a client relationship by requesting this information. KYC procedures differ by nation and sector. Financial businesses often demand thorough KYC checks, whereas telecoms firms have less stringent standards. Nonetheless, business clients must always give verified information. Full name, date of birth, and address are normally required.

How to automate the Corporate KYC process

A corporate KYC service provider will gather the relevant information from your customer’s business registration documents and validate it against a worldwide database. You will receive an assessment through email or instant messaging once they have completed their screening. You can also utilise corporate KYC automation services to generate a corporate risk score for your corporate clients and then use that score to monitor daily transactions. These scores allow you to spend less effort on low-risk consumers and more time on high-risk transactions or accounts.

How does corporate KYC help banks?

A corporate KYC service provider will generate a corporate risk score for you and monitor daily transactions based on that score. These scores allow you to spend less time on low-risk consumers and more time analysing high-risk transactions or corporate clients.

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