Identifying the beneficial ownership of a company, business or entity can be a complex, costly, and time-consuming process. However, business verification is essential for numerous reasons – not only is it required to meet new compliance obligations, but it also helps to ensure that the businesses you are doing business with are legitimate.
In the US alone, over 543,000 new businesses get started each month. With countless companies being registered all over the world, every day, it is proving exceedingly difficult to verify small businesses or merchants and identify true business ownership. Complex ownership structures, forged documentation, false declarations, and the time it takes to access official documents only complicate this process even further.
Luckily, thanks to advancements in technology, organizations now have real-time access to business data from around the globe, which ensures they can effectively and instantly verify businesses and their Ultimate Beneficial Owners (UBO).
Trulioo’s whitepaper, Do You Really Know Who You’re Doing Business With? A comprehensive guide to Business Verification and Ultimate Beneficial Owners, emphasizes the importance of verification and draws attention to the dangers associated with non-compliance.
Our whitepaper was designed to help businesses navigate their way around the issues associated with beneficial ownership. It provides insight into:
- How to verify and business and UBOs
- Why verification is necessary
- The legislation associated with business verification
- Repercussions of non-compliance, and
- How Trulioo helps its clients verify businesses and UBOs
What is a UBO?
The Financial Action Task Force (FATF) defines an Ultimate Beneficial Owner – sometimes referred to a Person of Significant Control (PSC) – as the “the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement”.
A beneficial owner is someone who has ultimate control over a business or entity, even though the legal title may belong to someone else.
Some companies can have exceedingly complex ownership structures, involving multiple tiers, agreements and paper trails and – despite the importance of being able to identify a UBO – there is no central global standard for regulating how companies are governed. This is problematic as it makes it easy to mask the true identity of a beneficial owner which can often be a tip-off for nefarious business dealings, such as money laundering or terrorist financing.
So, why is business verification necessary?
Any business that deals with the exchange of funds – be it a financial institution, payment network or merchant acquirer – needs to know exactly who it is they’re dealing with, in order to minimize the risks associated with bribery, terrorism, corruption, terrorist financing and money laundering.
Business verification is now also an integral part of many regulatory compliance requirements. In jurisdictions all over the world, strict requirements for proper Customer Due Diligence (CDD) and adherence to Know Your Customer (KYC) rules are being implemented for businesses opening accounts. For example, in the European Union (EU), the new 4th Anti-Money Laundering Direction (4AMLD) rules took effect in June. The 4AMLD requires organizations to take a risk-based approach to business verification, so implementing the necessary tools, policies and procedures for risk assessment is key.
In the United States, FinCEN’s Final Rule comes into effect in May 2018. These rules contain explicit CDD standards and include a new requirement to identify and verify the beneficial owners of legal entities.
There are also repercussions associated with non-compliance, which include but are not limited to, damaging brand integrity and corporate reputations, fines and other penalties.
How can Trulioo help?
To provide businesses and organizations with an innovative, effective and low-cost way of performing due diligence on business entities, Trulioo now offers real-time Global Business Verification. Spanning more than 80 countries, Business Verification clients can instantly determine the authenticity of business entities and their Ultimate Beneficial Owners (UBOs).
Trulioo clients can automatically validate company vitals – including business registration numbers, company names, addresses, status, key management personnel and date of incorporation, helping them to detect fraudulent behavior and criminal activity, such as tax evasion and money laundering.
By combining Trulioo’s Global Business Verification, electronic identity verification (eIDV), and ID Document Verification solutions, clients have secure access to reliable data sources, allowing them to instantly verify business entity details, perform watch list checks and identify and verify beneficial owners – all through a single API integration.
To learn more about the ins and outs of business verification and how Trulioo can help you, download our whitepaper here:
Trulioo Whitepaper: Who Are You Doing Business With?
Download our comprehensive guide to business verification and ultimate beneficial owners (UBOs). Learn the importance of verifying the identity of businesses that you interact with, and how advancements in digital technologies and virtual data sets can assist in solving verification challenges.