How to choose the best KYB solution provider (5 useful tips)

As firms grapple with adapting to volatile market conditions and economic uncertainties, staying ahead requires making informed decisions and partnering with the right vendors. This is especially true when it comes to Know Your Business (KYB) compliance. Despite small to medium-sized businesses (SMBs) with 500 employees or less making up 99.9 percent of all US firms, the process of opening a business account can be far from efficient. With SMB onboarding frustrations rising, selecting the best solution provider can be crucial for an organization’s success.

A reliable KYB vendor can offer firms the expertise, tools, and advanced technologies to navigate the complex landscape of identity verification, due diligence, and risk management. But with a myriad of options available in the market, how should firms approach choosing the best KYB solution provider for their needs? 

5 tips on how to choose the best KYB provider

1. Make sure the solution meets regulatory requirements

Since the introduction of KYB regulations in the Financial Crimes Enforcement Network’s (FinCEN) CDD Final Rule), US “covered financial institutions” must establish who controls the companies they are doing business with and verify they are not engaged in criminal activities. Similarly, the EU’s 5th Anti Money Laundering Directive (5AMLD) emphasized KYB processes for obligated entities, with the subsequent directive (known as 6AMLD) increasing the penalties for noncompliance. 

As a result, firms’ top priority should be ensure the solution they choose meets their regulatory requirements. Elements typically found in an AML compliant KYB solution include:

• Robust customer due diligence (CDD) processes to collect and verify information about business entities. This includes obtaining accurate and up-to-date data on the business’ legal structure and beneficial owners. 
• Sanctions and politically exposed person (PEP) screening to check if the business or its associated individuals are on any sanctions lists or PEP databases. Real-time risk databases should be prioritized to ensure any list changes are captured as soon as possible. For example, with ComplyAdvanatge, firms can confidently mitigate risk with the knowledge that watchlists, including the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals (SDN) And Blocked Persons List, are updated every 15 minutes. 

2. Check if and how the KYB software uses AI

Efficient and accurate data analysis is vital for effective anti-money laundering and combatting the financing of terrorism (AML/CFT). Without advanced technology like artificial intelligence (AI) and machine learning (ML), firms risk creating frustrations among their analyst teams and wasting time and money that could be deployed elsewhere.  

For KYB screening, firms can benefit from AI and ML through features like dynamic risk scoring. By configuring the solution to reflect a specific risk matrix, analysts can receive updates throughout each verification check as the risk of the business changes. Functionalities like this allow analysts to move away from risk assessment models that rely on static rules and predefined thresholds. Instead, dynamic risk scoring allows for real-time evaluation and adapts to changing business conditions and emerging risks. 

KYB is broken: We’re partnering with Detected to fix it

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3. Assess the KYB solution’s data coverage

To ensure the suitability of a KYB provider’s data coverage , senior decision makers should ascertain what registries the solution can auto-validate company data against. This may include jurisdictional coverage as well as the number and quality of registries onboarding teams have access to. 

To mitigate the risk of onboarding fraudulent businesses, firms operating in the US should also check if the KYB solution allows analysts to cross-reference a potential customer’s taxpayer identification number (TIN) and employer identification number (EIN) against the Internal Revenue Service (IRS) register. 

4. Review the integration capabilities

Ensuring compliance functions are well integrated into a firm’s wider financial crime architecture is crucial to breaking down system siloes and ensuring data can be consolidated to create a holistic view of risk. This includes connecting with a firm’s internal risk management and transaction monitoring systems, as well as reporting mechanisms to ensure a cohesive and effective AML program. Application programming interface (API)-driven solutions are the best way to experience two-way synchronization between an internal system and a vendor’s solution. 

With ComplyAdvantage, firms can get up and running with their KYB solution in one API call. Read what our customer 40Seas said about how easy it was to integrate our KYB solution into their existing platform:

“As a digital trade finance platform, automated onboarding and efficient KYB is critical for 40Seas. ComplyAdvantage’s KYB solution was really easy to get up and running with. With the system, we’re able to verify our customers in seconds, improving the customer experience and ensuring we can mitigate risk effectively”

– Igor Zaks, Co-founder and Chief Risk Officer, 40Seas

5. Ensure the vendor has strong industry knowledge and experience with relevant firms

When firms partner with a KYB provider that has relevant knowledge to their specific industry, they can be confident that unique compliance challenges and risk factors will be understood. This expertise ensures the provided solution aligns with industry regulations and helps firms alleviate common industry pain points (such as low conversion rates due to lengthy onboarding processes). 

Additionally, when a vendor has experience working with similar firms, greater out-of-the-box thinking is made possible when solving challenges. This also empowers implementation teams to be proactive, offering creative solutions that can help firms get to their intended solution more quickly or efficiently than they had anticipated.

Partnering with ComplyAdvantage for KYB

By streamlining workflows, centralizing risk data, and introducing a customer-friendly onboarding portal, our combined KYB solution with Detected reduces manual effort, accelerates onboarding, and minimizes operational costs. As a result, businesses can now benefit from dynamic risk scoring, continuous monitoring, and fewer false positives – ultimately driving revenue growth while enhancing compliance and customer experience.