How Automation in KYB Compliance Is Completely Reshaping Security in Fintech

iDenfy, a Lithuania-based RegTech company, 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. With financial crimes and regulatory pressures on the rise, the iDenfy team is focused on changing the traditional or manual KYB process, allowing companies to quickly and accurately verify business entities and minimize risks without sacrificing operational efficiency.

The Know Your Business (KYB) verification process has become an essential security measure for businesses across industries in the ever-changing regulatory landscape. High-risk industries such as Fintech companies, Virtual Asset Providers (VASPs), iGaming establishments or forex platforms require stricter controls, often involving the verification of individual customers and other business entities such as potential partners or third-party service providers. According to iDenfy, this is important because with advancements 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, is causing fraud to spread and become more mainstream. For those handling high volumes of customers, continuous monitoring is vital, but so is a robust onboarding process to actually understand 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 are dealing with legitimate entities. Generally, the KYB process involves verifying a company’s legal status, identifying its ultimate 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 that the company is compliant with anti-money laundering (AML) regulations to avoid the risks associated with dealing with shell companies that often pose a high risk due to potential money laundering opportunities, as well as tax fraud or other criminal gangs who are their own experts in financial crime.

The iDenfy team further explains that KYB is not just a legal requirement; it is a fundamental step in protecting businesses from financial crime and reputational damage:

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

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

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

It is worth noting that KYB requires companies to verify several key data points, such as ensuring that the company is legally authorized to conduct business activities, verifying any legal documentation required for the activities, or identifying shareholders who hold 25% or more of the company’s ownership. Historically, companies performed KYB checks manually, leading to inefficiencies, data inconsistencies, and errors. Manually collecting and verifying information caused delays in the onboarding process, leaving companies vulnerable and 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 must 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 corporate information and check UBOs quickly and efficiently, ensuring compliance with FinCEN’s Customer Due Diligence (CDD) Final Rule and similar regulations worldwide.

According to iDenfy, KYB compliance should also help companies meet requirements not just in one country but globally, allowing them to take a risk-based approach to AML and conduct due diligence to mitigate risks.

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

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 the recently updated KYB platform for free, so that companies can see for themselves how the platform simplifies compliance-related tasks and enables companies to meet regulatory requirements without slowing down the overall onboarding process, while reducing operational costs.