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KYB (Know Your Business) is a process that financial services providers must undertake to verify the identity of a business entity and assess its potential risks before entering into a business relationship with it. KYB is a legal and regulatory requirement in many jurisdictions, and failure to comply can result in significant fines and reputational damage.
The KYB process typically involves collecting and verifying information about a business's ownership, group structure, and beneficial owners (UBO). This includes information about the business's legal name, registration number, and date of incorporation. The provider must also identify and verify the individuals who own or control the business, as well as any beneficial owners. The provider must assess the potential risks associated with the business, such as involvement in money laundering or terrorist financing, and take appropriate steps to mitigate those risks.
Financial services providers must ensure that the KYB information they collect is protected and kept confidential. This is to maintain business privacy and security, as well as to comply with legal and regulatory requirements related to data protection.
While KYB is focused on verifying the identity of a business entity and assessing its potential risks, Know Your Customer (KYC) is focused on individual consumers.
In conclusion, KYB is an essential process for financial services providers to verify the identity of a business entity and assess its potential risks before entering into a business relationship with it. The process helps to prevent financial crime and protect the integrity of the financial system. The provider must collect and verify information about the business's ownership, structure, and beneficial owners, as well as assess the potential risks associated with the business. The provider must ensure that the KYB information they collect is protected and kept confidential, to maintain business privacy and security.
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