Know Your Business Partner compliance is an integral component of modern business interactions, not only in financial institutions.  It, however, presents some critical challenges which the business has to conquer for it not only to remain compliant but also realise a positive customer experience.

The Major Challenges of KYB Compliance

1. Data Collection and Verification

Business Partner Data gathering and verification of its authenticity are time-and resource-consuming activities.  Diligent due diligence is to be ensured without affecting customer experience in any manner.  Accurate data for compliance is a must, but it is tightrope walking not to frustrate business partners and your own team due to the long procedure.

2. Complexity in Regulations

The regulations for KYB vary significantly across different jurisdictions.  For a company that operates business in multiple regions, compliance can be extremely difficult.  To complicate things further, these rules are not constant; they require periodic check and overhauls of the KYB procedures to remain compliant.

3. Lack of Competent Staff

There is a wide gap in qualified and experienced KYC and KYB analysts and compliance staff across financial institutions, resulting in customer due diligence reviews and inefficiency in KYB processes.  This costs the dilemma with skilled manpower demand far outpacing its supply, thereby highly creating a bottleneck in compliance efforts.

4. Compliance Costs

Effective KYB processes are expensive, entailing all the associated expenses of technology and staffing: but they are small compared to possible penalties for their violation.  The financial cost could be significant for the large compliance required with KYB.  In particular, for smaller businesses, cost-efficiency needs to be balanced against compliance effectiveness in almost continuous interaction.

5. Customer Experience

Intrusive KYB requirements and lengthy onboarding processes may kill customer experience and frustrate your own team. The prolonged and annoying process of requiring more information may frustrate your business partners.  Smooth and frictionless user experience while complying with regulators comes as prime in importance.

6. Undetected Risks

The challenge is the ability to keep up with the dynamic watchlists, PEP lists, and other indicators of risk, such as daily changing sanction lists.  Failure to keep pace with the updates brings along heightened risk financial crimes can go undetected.  These can have serious implications for the business.  To avoid this risk, there are demands for constant monitoring and updating of-risk indicators.

7. Data Privacy and Security

Customer data is to be kept, processed, and protected with strict data privacy regulations by businesses.  The act of balancing data security without influencing business partner experience is actually a tightrope walk. Any breach or mishandling of business partner data can attract heavy penalties and loss of trust.

How to Overcome KYB Challenges?

Following are a few strategies that businesses can use to overcome these challenges:

1. Risk-Based Approach: Implementing the risk-based approach will allow businesses to use their resources on business partners who are riskier and hence make it easier on others to verify.
2. Advanced Technologies: Tools will help to increase efficiency and effectiveness of KYB procedures. This functionality can be used in automating data collection, verification, and monitoring – in part -reducing reliance on human resources.
3. Continuous Review and Update: The continuous review and updating of policies and procedures related to KYB will keep the business up-to-date with changing regulations. This proactive approach will therefore help adapt to changes quickly and maintain robust compliance.
4. Training and Development: The constraint of competent personnel in the staff can be dissolved by investment in training and development for the KYB analyst and compliance staff. Continuous education and professional development provide a guarantee that staff will do their job on the complexities of KYB compliance with adequate skill and knowledge.
5. Customer-Centric Design: KYB processes can be designed in a customer- and employee centric way. Make sure that forms are simplified, steps are reduced, and the user interface is all-encompassing enough in nature to reduce the negative effect on customer experience.

To address these challenges, businesses are advised to adopt a risk-based approach, leverage advanced technologies, and continuously review and update their KYB policies and procedures.

How Trustnet.Trade Can Help with KYC and KYB Compliance

Using Trustnet.Trade enhances KYC and KYB by manifolds by dealing with the compliance-related issues efficiently.  The platform automates due diligence for business partners through a single click – extensive checks, including sanctions and UBO screening. Trustnet.Trade facilitates easy compliance with real-time partner screening and constant risk monitoring.  It provides top-tier data analytics and real-time verification, as well as practical tools such as templates and checklists for the prevention of risks.  It runs comprehensive compliance checks against the sanctions, AML regulations, and PEP lists, in turn, making verification and audits easier.  Businesses enjoy greater transparency and trust by giving an indication of the compliance status through the use of a widget that is up-to-date.  This ends up saving time and costs for companies while maintaining a robust compliance and positive customer experience.