Verify Beneficial Ownership Information – Legal Compliance & Security

In this era of digital revolution, businesses have a vast network of different sister and child companies worldwide. They operate in different regions with sign head offices to scale their businesses. Companies can have numerous partners, shareholders, and ultimate beneficial owners.

Before conducting business with any company or establishing a partnership, it is necessary to identify the authenticity and credibility of its shareholders, partners, and UBOs. Many companies have hidden beneficial owners who are involved in various illegitimate activities, and they can cause complications for related businesses. Therefore, law enforcement agencies have made it necessary for organizations to report their beneficial ownership information. Financial Crimes Enforcement Network (FinCEN) has made it necessary for various companies to report beneficial ownership information (BOI) to overcome criminal activities and fraudster attacks.

This blog post will highlight the role and need of business ownership information verification and organizations that are subject to BOI reporting.

Why is it Necessary to Verify Business Ownership Information?

Businesses are at risk of fraudster attacks because they utilize advanced methods for their fraud strategies.  Companies often undergo heavy financial loss and reputational damage. Many shell companies and fake organizations reach out to businesses in the name of partnerships and deals, but they actually make them victims of data breaches and financial loss. Sometimes, businesses fall prey to reputational damage and heavy penalties for becoming partners of such organizations that have hidden UBOs or those involved in illegal activities. Hence, the Financial Crimes Enforcement Network (FinCEN) made it necessary for various companies to report their UBO’s complete information. It brings the following two major outcomes for businesses:

Legal Compliance

Growing criminal attacks and fraudsters’ tactics brought various complications for businesses worldwide. Nowadays, companies are highly concerned with using protocols to secure their platforms from ever-growing criminal and fraudster activities. On the other hand, legal authorities continue to work to identify solutions for enhanced security of businesses and corporations. There are various regulations that are necessary to comply with real-time security. The Corporate Transparency Act (CTA) is in the form of an anti-money laundering law, which it must comply with. Organizations that violate any regulations would suffer heavy fines and reputational damage. In this regard, BI reporting plays a vital role in the overall compliance process as it also allows companies to have transparency of UBOs.

Additionally, BOI reporting in itself is necessary, and it helps businesses secure their platforms from legal complications such as penalties for non-compliance.  As per the CTA, BOI reporting plays a vital role in anti-money laundering (AML) compliance and contributes to enhanced security from legal and financial complications.

Security

Law enforcement agencies always devise certain regulations for real-time security from ever-growing criminal activities and make it necessary for companies to comply with them. Similarly, business ownership information reporting is part of regulatory compliance, and it works to enhance security from ever-growing criminal activities. It is necessary for every business and company to report their ultimate beneficial owner’s data to create a sense of transparency for upcoming entities to establish scour partnerships. Companies that hide their UBOs or do not comply with BOI reporting requirements are not secure to work with. However, firms that have registered records of their UBOs are safe to establish partnerships and deal with them.

How Can Companies Verify Business Ownership Information?

For business ownership information verification, there are various services that businesses can employ. Many software firms have generated such technology which can help organizations identify and validate beneficial owners of any organization before establishing any business relations with them. UBO information of a company is not accessible to everyone but only to those entities working for enhanced security purposes. The companies offer various services that businesses can utilize for UBO verification. These companies have legal direct access to UBO data, and they have registered identities. There are following two major services that businesses can utilize for UBO verification:

Know Your Business (KYB) Solution

KYB compliance solutions help companies to verify the risk potential of entities and verify UBO details at basic level. It consists of an automated process that works through artificial intelligence checks to validate business data.

EDD Service

Companies offer enhanced Due Diligence service to identify and validate high-risk entities. It is an advanced-level verification solution that works to identify complexities for real-time security.

Final Words

Due to ever-growing criminal activity and fraudsters’ innovative strategies, it is crucial for businesses to verify every entity before establishing a partnership with them. Additionally, the verification process plays a vital role in the security of business dealings. For enhanced security, transparency, and accurate verification, businesses must comply with all the regulations that law enforcement agencies devise to comply with. Beneficial ownership information is necessary to report and register as it contributes to the financial health of the overall business. Companies can identify the transparency of relevant organizations before making partnership decisions, and it provides enhanced security from shell firms and fake organizations.