Corporate KYC, Know Your Customer or Know Your Client is the process of validating the legitimacy of a business or corporate entity and beneficiary owners to meet AML and KYC compliance. This is most often referred to as Know Your Client because it is a B2B process compared to B2C transactions that are more referred to as Know Your Customer.
Corporate KYC is just as important as individual KYC as it is important that a business validate another business before transacting with them. This is to satisfy AML requirements and identify associated risks. In this article, we would be discussing what is corporate KYC, its importance, the legal documents and how to perform corporate KYC with automated tools.
Let's dive right in!
An overview of Corporate KYC
Although KYC is a term that most businesses and individuals in the finance industry are familiar with, it is most often used to refer to customer-business relationships. This is because many tend to have the idea that KYC processes are only used by businesses to verify the identity of single customers. However, KYC processes are also used to validate corporate entities. This process is called corporate KYC.
Read more - What are the Different Types of KYC?
Why is Corporate KYC important?
Corporate KYC is important because it helps a business identify its customer, which in this case, is another business or corporate entity. It is a process of customer onboarding during which a business identifies potential risks in the relationship and define subsequent actions. It can be used in key activities like when a business fills out a loan application or requests to enter a partnership with another business.
Corporate KYC is important in combating financial crimes, money laundering, and counter-terrorist funding among other illegal activities. KYC and AML regulations are stricter than ever due to the ever-rising threat in the finance industry.
Although very important, a corporate KYC process could become very cumbersome, which is why most organisations today make use of the best identity verification service. This helps save resources, time, and cost while meeting compliance requirements.
Read more - Why is KYC Important for financial institutions?
What are the required documents for Corporate KYC?
The following are the most important documents a company needs to provide during corporate KYC:
- Tax numbers
- Beneficiary's details (e.g passport, government-issued IDs, etc.)
- List of trustees
- Copy of certificate of incorporation
- Bank statement and returns
However, do note that KYC processes vary depending on the country and industry. For example, the finance industry is the most strict and requires proper validation and a series of documents especially during credit or loan applications. However, the telecommunication industry has more lax requirements although being held to regulation standards too. However, you are generally required to verify that the company is legally registered.
We covered everything on KYC documents in this article - What is a KYC Document.
How to automate corporate KYC process
Corporate KYC processes could be cumbersome, resource-draining and costly. This is why most organisations employ the services of KYC onboarding automation software solutions.
Achieving KYC onboarding is easy when using Youverify’s operating system or YV OS. This innovative software is Youverify’s flagship product that simplifies the whole Know Your Customer process for you. You can create automated forms that perform a preset action based on the KYC needs of your business after verifying the identity and credentials of potential customers.
Book a demo session today to see how YV OS can help automate your business’s KYC Due Diligence! Also, feel free to contact us here for any questions.
Bottom line
Understanding what is corporate KYC is very important for identifying legal entities or the ones involved in illicit acts. This could as well be a lifesaver for your organisation's image in general and could help avoid sanctioning. Do well to carry out corporate KYC before establishing any business relationship with corporate entities as the case may be.