Business and entity verification (BEV) is crucial for understanding the credibility and legality of companies, aligning with the universal business owner (UBO) and Know Your Customer (KYC) regulations, and involving thorough examinations and regular screenings against sanction lists.
Challenges include cross-border verification issues, higher costs without direct government data sources, and stale data impacting efficiency. Market demands focus on automated solutions, accuracy, and freshness of data. Liminal estimates a global total addressable market (TAM) for BEV in financial institutions and fintech to grow from $4.4 billion in 2024 to $5.5 billion by 2028, with a CAGR of 6.1%. Automation, AI/ML advancements, Integrated Identity Platforms (IIPs), continuous KYB solutions, and adapting to changing UBO thresholds are key trends shaping the future of the BEV market.
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Download the full report for a detailed analysis of key findings:
- 98% of buyers currently use manual reviews, but 80% are transitioning to AI-driven automation for reduced compliance risks.
- Due to complex structures and diverse jurisdictions, cross-border entity verification extends onboarding times for 86% of buyers.
- Over half of buyers prefer aggregated third-party solutions for streamlined verification, citing efficiency and resource savings.
- Priority capabilities in a solution include TIN verification, UBO identification, continuous KYB, PEP/sanctions, compliance rules library, and legal entity mapping.
- Key purchasing criteria are data accuracy, regulatory compliance, and data recency, with cost being significant for only 56% of buyers.
- Market and Buyer’s Guide for Transaction Fraud Prevention
- The Rise of Integrated Identity Platforms
- The Market for Reusable Identity
- Link Index for Account Opening
How business and entity verification works:
Business and Entity Verification (BEV) is a crucial process in the financial services and fintech sectors, undertaken to meet regulatory compliance requirements and reduce risks while onboarding business customers. Its primary goal is to ensure the legitimacy and compliance of entities being onboarded, safeguarding against undue risks. BEV encompasses a combination of manual and automated processes to verify the credibility and legality of businesses and entities. This process is vital for maintaining trust, transparency, and compliance within these industries, preventing fraud, and ensuring the smooth onboarding of clients.
The BEV process involves several essential steps. It begins with an initial examination of the business entity, which includes verifying its registration and assessing its financial stability and legal standing to ensure legitimacy. However, BEV goes beyond this initial verification, extending to continuous monitoring to ensure compliance with regulatory frameworks. This involves proactively conducting regular screenings against sanction lists to detect any changes in the entity’s status that might indicate non-compliance. Additionally, BEV includes screening for Politically Exposed Persons (PEPs) and individuals or entities subject to economic sanctions, embargoes, and other legal restrictions. These comprehensive checks are essential for businesses to mitigate risks, ensure compliance, and maintain trust and transparency in their operations.
Differentiating BEV from KYB
KYB, or Know Your Business, is commonly used in financial services to describe meeting regulatory KYC (Know Your Customer) requirements for business entities. It focuses on verifying the attributes of legal entities, such as their ownership structure, financial stability, and regulatory compliance. BEV encompasses broader use cases beyond compliance, including fraud prevention and risk management. It thoroughly examines businesses, similar to KYB, but also addresses risks associated with financial crimes and fraud.