If you are still thinking about the increasing rate of financial fraud, you need to understand the best ways to avoid them. KYCC and KYB are extensions to the process of preventing money laundering cases. Get to know more about it here
Money laundering cases are on a huge spike and must be controlled with the most effective solutions. Realizing the increase in financial breaches, many financial institutions started filtering their transaction process. Using KYC, screening, and internal confirmations, everything that ensured every transaction was used by the financial institutions and other businesses.
Despite indulging in so many filters, money laundering cases were not controlled. Financial loss is still huge even if reduced by half percentage.
Soon, other filters were introduced to prevent money loss cases. KYCC or know your customer’s customer and KYB or know your business are two effective tests that keep money laundering cases far away.
Did you ever think of reaching out to customer’s customer for verification? Well, it is the farthest a company could go to try to protect its funds.
Before getting deep into the theories and procedures, let’s understand exactly KYCC and KYB.
We might be aware of the strategy of using a front or a dummy company to shield another company from scrutiny. The reasons to set up a shell company are supported by legitimate reasons like protecting privacy or limiting liability.
The first impression of a shell company is negative. It is believed to hide or launder money. Because of this, many countries had no intention of expanding their filters and accepting KYCC. Since the demand to close potential loopholes is increasing, KYCC is getting more attention than ever.
KYCC is a method where the customers are checked along with their branched customers. The officials look at the business ties, their sources of funds, their legitimacy, and the level of risk that the third parties are involved in. There are no direct red flags that point out money laundering activities. Using the right means can land you the best understanding of money laundering risks.
KYCC is one of the most effective and accurate methods to screen through the potential risks.
KYB, also known as Know Your Business is yet another accuracy-prone method of estimating money laundering risks. It is not exactly the same as KYC but somehow matches it. The difference lies where KYB focuses on knowing and identifying the companies and suppliers, and KYC is focused on identifying the customers.
KYB basically is a process that shares all the features we have already experienced in the KYC process. In this process, the person responsible or the legal representative of a business is recognized. Many high-profile companies and businesses are always at risk of money laundering. They aim at indulging with companies that are safe and secure. Although the companies legalize the concern of guaranteed and secured deals, there is always a loophole.
Various changes in the regulations have moved the focus on KYCC and KYB.
Digitization caught pace to regulate the accurate implementation of the KYCC and KYB processes. The digitalization and delocalization made the KYB implementation important for the companies that offered products and services to B2B companies.
Money laundering cases are multiplying by the second. Companies and individuals find it easy to barge into confidential information or carry out fraud. There are so many loopholes and work gaps that the money launderers exploit the security boundaries to commit financial frauds.
Certain red flags can help you avoid money laundering cases like multiple accounts, awkward transaction patterns and sending huge amounts of money to multiple accounts. Knowing these red flags can help companies to avoid financial fraud.
To eliminate financial frauds from the scenario, many AML software is developed. AML-TRACE is one of the finest AML software developed by Smart Infotech. Dig into more information about the software to make the proper use.