Authorities are asking for more information than ever – here’s how you can stay up to speed.

KYC requirements for corporates are an essential prerequisite for businesses offering financial services, and they’re quickly getting tougher to comply with.

Like financial institutions, owners of these businesses are feeling the heat of the KYC spotlight, which means:

  • Understanding what KYC regulatory requirements are, which are complex and vary by industry and regulator
  • Finding the time and resources to complete a stringent KYC process
  • Avoiding mistakes with KYC compliance which can lead to severe penalties or worse.

These challenges should be at the top of every executive’s to-do list in a world where  KYC requirements for banks and businesses show no signs of slowing down. In fact, they look set to intensify with global financial crime on the rise in 2023. 

So, how can business leaders stay up-to-speed with KYC requirements for corporates and keep their companies safe? 

The answer lies in knowing exactly what these demands entail, and proactively implementing effective KYC compliance strategies.

This article will provide you with the information to do just that.

Table of contents

  • Why do companies need KYC?
  • What is KYC for corporates?
  • How are KYC requirements for corporates changing?
  • What are the documents required for corporate KYC?
  • How to build revenue with Berkeley Payment’s fully compliant real-time payments

Want to offer fully compliant real-time payments to your customers? Sign up with Berkeley Payments to find out how you can safely build a long-term revenue stream.

Why do companies need KYC?

In today's complex financial world, KYC is a vital shield against a rising tide of financial crime.

A staggering $3.1 trillion of illicit funds are estimated to be coursing through the global banking system, according to recent Nasdaq data. This is fueled by factors like increased geopolitical tensions and economic instability. 

Business leaders have named regulatory KYC compliance as their challenge of greatest concern when it comes to protecting themselves from financial crime.

Top financial crime challenges for business leaders (2024)

                                                   Source: Nasdaq

KYC compliance is a security checkpoint for your business. It allows you to build trust with legitimate customers while filtering out those who could pose a threat. 

In a world where financial crime is on the rise, meeting KYC regulations isn't just a recommendation – it's a necessity.

What is KYC for corporates?

The Know-Your-Customer process for a corporate entity checks the background of your customers to make sure they’re not involved in illegal activities like money laundering or terrorist financing.

Aside from the obvious legal consequences of non-compliance, it also protects you from fraud or losses from illicit transactions.

Corporate KYC works by verifying the following information during the onboarding process:

  • The customer’s identity
  • Their presence on any sanctions lists or watchlists
  • The ownership structure of any business they’re involved in (and if it includes beneficial owners or politically exposed persons - PEPs)
  • Their business activities and potential risks associated with them, helping you build an accurate risk profile.

Once collected, the information goes through anti-money laundering (AML) to maximize fraud prevention.

How KYC requirements for corporates are changing

In a digital world beset by a new wave of hi-tech fraudulent activity, governments around the world are stepping up KYC demands to help protect businesses.

What does this mean? Well, businesses can expect new anti-money laundering (AML) regulations to tighten KYC requirements. The US Corporate Transparency Act (CTA), for example, will require financial institutions to collect detailed KYC information about a company's real owners ( or their "beneficial owners"). 

The EU's 6AMLD is also bringing crypto assets under AML rules. This means stricter checks for businesses that offer cryptocurrency services, like crypto exchanges or digital wallets.

The good news is that we’re on the cusp of a digital KYC transformation, one which is taking us from paperwork and delays to a smoother automated system. 

This shift is driven by a critical need to combat rising financial crimes, while also providing a smoother customer experience.

New technology will be at the forefront of this change and KYC requirements for corporates will change according to this. Soon, your business will need to offer updated identity verification methods to stay in line with evolving regulatory compliance. 

Alex Ross, Co-founder & COO of startup Hire Horatio CX agrees. Echoing the above concern among business leaders,  he prioritizes a “digitized and streamlined KYC process in a recent Forbes article. “Your business will benefit greatly if you are able to take advantage of an already streamlined and efficient digital customer playbook”, he stresses.

kyc requirements for corporates

But what will this playbook look like? Let's explore some of the ways we’re about to see this happen.

Video KYC

Imagine an online meeting where new customers share their documents and have them verified instantly. 

Video KYC uses artificial intelligence (AI) to analyze ID documents against government databases (and other lists) in seconds. Instant KYC checks like this speed up customer onboarding and greatly reduce faulty verifications thanks to the high accuracy of facial recognition.

NFC Technology

Many countries now have passports or ID cards with embedded NFC chips. These chips can be scanned with an NFC-enabled device (like a smartphone) to instantly verify a customer's identity. 

There is no known way to tamper with these chips, so security is bullet-proof, and there’s no need for manual entry - just a simple scan.

Going passwordless 

Passwords are a security nightmare. Biometric authentication (fingerprint or facial recognition) is becoming increasingly common, and KYC is poised to harness this technology. 

Fingerprint, eye, and face scans will all become possible options, with companies able to choose between which method of authentication they prefer. 

It’s possible, of course, that customers will object to using body parts to identify themselves, so this is an area that jurisdictions and companies must treat with sensitivity.

AI and ML for customer identification

New tools now automate KYC checks saving businesses time and money. Optical Character Recognition (OCR), for example, can automatically pre-fill online forms with data extracted from public records. Human error is eradicated as there is no need for manual data entry.

AI can also analyze massive amounts of customer information throughout the KYC process. Machine learning algorithms can detect patterns and potential red flags associated with criminal activity like identity theft.

Corporate KYC becomes a faster, more accurate, and more secure process with AI. Businesses can now streamline onboarding procedures and strengthen their risk management strategies at no extra cost. 

What are the documents required for corporate KYC?

The digital advances in the corporate KYC process may speed things up, but it’ll still require customers to provide various documents to meet customer due diligence (CDD) protocols. 

The classic items, such as proof of address and date of birth, will continue to be crucial in ongoing monitoring efforts. Further customer information such as identification numbers and beneficial ownership information (BOI) will also be necessary, the depth of which according to the company or jurisdiction asking for it.

KYC is also typically only necessary for the first stage of the three stages of AML requirements, also known as placement.  

Beyond KYC, the placement stage extends to transaction monitoring for suspicious activity and sanctions lists to identify individuals or entities linked to illegal activities.

Later on, suspicious activity is subject to layering and integration measures which are beyond the control of businesses and in the hands of the authorities.

Turning KYC into an advantage

While KYC might seem like a burden, it presents an opportunity. Streamlining your KYC processes demonstrates a commitment to transparency and good governance. This can enhance your reputation and build trust with partners and investors.

Remember, KYC is not just about ticking boxes. It's about safeguarding your business and the financial system as a whole. By approaching KYC strategically, you can turn this regulatory hurdle into a competitive edge.

How to build revenue with Berkeley Payment’s fully compliant real-time payments

Traditionally, KYC (Know Your Customer) has been a manual, time-consuming process. But with Berkeley Payment, you can transform KYC into a smooth, efficient experience that strengthens your business.

Our embedded finance platform boasts built-in AI and machine learning tools to automate key stages of KYC/CDD (Customer Due Diligence). 

Here's how it empowers you:

  • Automate KYC/CDD: Say goodbye to manual data entry errors. Our platform automatically extracts information from customer IDs and documents, saving you valuable time and resources.
  • Single API incorporation: All you need is one connection to tap into our KYC infrastructure
  • Real-time protection: Enjoy peace of mind with 24/7 transaction monitoring and risk assessment.
  • Expert support: Our dedicated team is here to guide you through every step of your AML compliance process.

Working with Berkeley helps you achieve faster customer onboarding, reduced costs, and a more secure environment for your business. 

Plus, by ensuring robust KYC compliance, you open doors to offering fully compliant real-time payments – a revenue-generating service for your business. Partner with Berkeley Payment and turn KYC into a competitive edge.

Turn KYC compliance from a chore into a strength. Sign up with Berkeley Payments to find out how our real-time payments platform can help you do this.

Send, Spend & Receive With One Exceptional Payments Platform

Find out how Berkeley Payment can add value to your business with white-label prepaid or debit card programs and real-time money movement solutions.

Arrange a quick call with our team to see how we can best help your company

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