How to Conduct KYB: A Complete Step-by-Step Guide | RapidAML скачать в хорошем качестве

How to Conduct KYB: A Complete Step-by-Step Guide | RapidAML

Hi everyone! I’m Muskan Acharya, an AML consultant working in financial crime compliance. Welcome to RapidAML, where expert insights meet practical AML solutions. In today’s video, we’ll talk about Know Your Business or KYB, what it is and how to conduct it effectively. So, let’s get started! Before we discuss the KYB process, let’s quickly understand what it means. KYB is the process of understanding and authenticating the legitimacy of a customer’s business when dealing with legal persons. KYB helps businesses ensure that their customers are genuine, have legal business operations, and are not involved in financial crimes such as Money Laundering, Terrorism Financing, and Proliferation Financing. Now, let’s come to the main part. KYB can be conducted in several key steps. Let’s go over these steps one by one. • The first step is Business Identification and Verification. In this step, businesses need to ensure that the customer they are dealing with is a legitimate legal entity with genuine business operations. For this, businesses would need to interact with their customers and gather information such as incorporation details, registration information, business address, operation status, etc. Documents such as Certification of Incorporation, Articles of Association, Trade License, etc., can be collected and authenticated to verify this information. These documents help confirm that the business is properly registered and compliant with legal requirements. • The second step is to understand the ownership structure of the customer and conduct KYC for their Beneficial Owners. After verifying the customer is a legitimate business entity, the next step is understanding the customer's ownership structure to identify its Beneficial Owners. Beneficial Owners are individuals who ultimately own or control the customer. Once the Beneficial Owners are identified, businesses must conduct KYC or Know Your Customer checks on them, just as they would for individual clients. This step helps in detecting potential financial crime risks associated with the people who actually control the customer. • The third step is to conduct the KYC of the parties associated with the customer. Associated parties include authorised signatories and agents of the customer. This ensures that all key individuals representing the customer are verified. KYB and other processes, such as name screening, help businesses gain information about a customer. Businesses can conduct a customer risk assessment (CRA) using this information. This involves assessing the financial crime risk a customer poses to the business and adopting risk control measures accordingly. CRA is an important step after conducting KYB. Strictly speaking, CRA is not part of the KYB process. For more clarity, CRA and KYB are both part of the Customer Due Diligence process. However, CRA must be conducted before onboarding the customer. This is to decide whether the financial crime risks posed by the customer are within the risk ap petite of the business. This leads us to the next step. After understanding the financial crime risks posed by the customer, businesses need to decide whether these risks are within their risk appetite. If it is, businesses can onboard the customer and adopt risk control measures according to the degree of financial crime risks posed by their customer. If not, businesses can choose not to onboard the customer. KYB is not a one-time activity. Customer information, as well as the financial crime risks they pose, are bound to change with time. Therefore, businesses must constantly monitor their relationship with the customer to detect any changes in a prompt manner. For example, changes in the ownership structure of the customer, expired KYB documents, or new regulatory requirements can trigger the need for reconducting KYB. Even if no change is detected, KYB must be conducted periodically. By following these actionable steps, businesses can effectively complete the KYB process while ensuring AML compliance and mitigating financial crime risks. Adopting KYB software can further streamline and accelerate this process, enabling faster and more efficient customer onboarding. That’s all for today’s video! If you found this information helpful, be sure to like, share, and subscribe to RapidAML for more expert insights. See you in the next video