How Automation in KYB Compliance Completely Restructures Security in Fintech

iDenfy, a Lithuania-based RegTech company, has announced new automated features in its Know Your Business (KYB) platform, which will contribute to the company’s goal of helping transform the Fintech industry by revolutionizing the business verification process. As financial crimes and regulatory pressure increase, the iDenfy team is focused on changes to the traditional or manual KYB process, allowing companies to quickly and accurately verify business entities and minimize risk without sacrificing operational efficiency.

The Know your business (KYB) verification process has become an essential security measure for companies across industries in the ever-evolving regulatory landscape. High-risk industries, such as Fintech companies, Virtual Asset Service Providers (VASPs), iGaming institutions or forex platforms, require stricter controls, often involving the verification of individual customers and other business entities, such as potential partners or third-party services. providers. According to iDenfy, this is important because with advances in AI, financial crimes such as money laundering, terrorist financing and fraud are becoming increasingly sophisticated.

“Generative AI fraud, including the use of false or forged documents, allows fraud to spread and become more mainstream. For those who deal with large volumes of customers, ongoing monitoring is critical, but so is a robust onboarding process to actually find out the true ownership structure of your partner before entering into a business relationship with them.” said Domantas Ciulde, CEO of iDenfy.

As a result, even unregulated companies have strict KYB processes in place to ensure they work with legitimate entities. Generally, the KYB process involves verifying the legal status of a company, identifying its beneficial owners (UBOs) who often use complex ownership structures to hide their identities. With geopolitical tensions around the world and rapid changes in sanctions lists, this verification helps ensure the company is compliant with Anti-Money Laundering (AML) regulations, helping to avoid the risks associated with dealing with shell companies that typically carry a high risk due to potential money laundering opportunities, as well as tax fraud, or other criminal gangs who are their own financial crime experts.

The iDenfy team further explains that KYB is not just a legal requirement; it is a fundamental step in securing companies against financial crimes and reputational damage:

“With the complexity of today’s business landscape, having an automated solution like that from iDenfy can help companies meet demands efficiently and confidently. Some organized crime groups create companies that exist on paper, and in reality, when you start assessing standard information such as their address, registration number, related persons, etc., you can notice certain red flags.” Ciulde explained.

“However, there are multiple points that compliance teams need to go through, and unfortunately without some form of software, this is an impossible task due to the size of the KYB process.”

With this in mind, iDenfy has also updated its KYB solution and added advanced sanctions and Politically Exposed Persons (PEP) screening to ensure companies are not working with fraudulent individuals. This is essential for maintaining a good risk management strategy, as risk profiles change along with changes in sanctions lists or PEP status. Additionally, iDenfy’s KYB platform has integrated adverse media checks, which scan global news sources to identify any negative information about a company or its owners. According to iDenfy, these automated features streamline the entire KYB process, making it a seamless part of the business onboarding flow.

It is worth noting that KYB requires companies to verify several key data points, to ensure that the company is legally authorized to conduct business activities, to verify all legal documentation necessary for business operations, or to identify shareholders who have 25% or more ownership of the company. Historically, companies performed KYB checks manually, leading to inefficiencies, data inconsistencies, and errors. Manually gathering and verifying information caused delays in the onboarding process, leaving companies vulnerable and potentially leading to non-compliance or even fraud. The introduction of automated KYB solutions has significantly improved this process. Compliance officers can now avoid time-consuming manual procedures and rely on automation to ensure accuracy and efficiency.

iDenfy believes that a good KYB verification system should meet the need for speed, accuracy and compliance, allowing organizations to perform KYB checks in real time. By automating this process, iDenfy’s solution enables companies to verify company information and audit UBOs quickly and efficiently, ensuring compliance with FinCEN’s Customer Due Diligence (CDD) Final Rule and similar regulations worldwide.

As iDenfy claims, KYB compliance should also help companies meet the requirements that are regulated not just in one country but globally, so they can take a risk-based approach to AML and conduct due diligence to mitigate any risk .

“Our automated KYB solution enables companies to conduct thorough due diligence without sacrificing efficiency. We are proud to offer an easy-to-use, reliable tool that keeps companies compliant and helps them operate safely in a rapidly changing regulatory environment.” added iDenfy CEO Domantas Ciulde.

iDenfy’s automated KYB platform can be an ideal solution for companies looking for speed, accuracy and ease of use. iDenfy invites other organizations to try out the newly updated KYB platform freeso that companies can see firsthand how the platform simplifies compliance-related tasks and enables companies to meet regulatory requirements without slowing down the overall onboarding process, and reducing operational costs.