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Business Address Verification: Securing Companies Onboarding Process

09 February, 2024

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It is not a piece of new news to verify customers’ addresses during the onboarding. This protects companies from fraudsters and assists them in compliance. But complications begin when we have to onboard a business as a partner, the question arises of how to verify a business address. This article will guide you on how to comply with business address verification. 

What is Business Address Verification?

Simply put, business address verification collects and authenticates information about the company’s location. This cross-checking address ensures the company is working in the real world, not only on paper. There are three types of verified business addresses:

Address Check 

The address check is a quick review of the location by confirming it is completed by cross-checking the database. The companies that only have to fill out the form from the company before onboarding mainly used address checks. It ensures address availability and confirms the company is the only business registered on a particular address.  Additionally, this allows you to verify loopholes in the address consistency. 

Address Validation 

Address validation is a process of confirming the location by validating that they are operational and working from the same submitted address. This involves checking the street, house number, office contact, and zip code are valid. Address validation is a key element for businesses that fall under international watchdog regulations. For address validation, you can authenticate the document submitted by the company. 

Address Verification 

Address verification is an in-depth location attestation process, a coalition of other types. It typically verifies the address by cross-checking government databases and third-party. In fact, address verification ensures location accuracy and consistency. Moreover, it screens addresses against sanctions locations, which prevents a company from doing bogus business. Furthermore, this approach is compulsory for all businesses that comply with anti-money laundering and counter-terrorist financing regulations. It bolsters their security and assists them in streamlining the business onboarding experience. 

Why is Address Verification Significant? 

Business address verification brings various advantages for companies. It is indicated as a basic step, but this one check can protect entities from money laundering, terrorist financing, and financial crimes. Below are some key points for verifying business address: 

Enhance Security 

The address verification bolsters the company’s security by authenticating they were onboarding the legal company. Confirmation of the address ensures the business you are starting a partnership is real and not involved in illicit activities. That minimizes the risk of financial fraud such as money laundering, terrorist financing, drug trafficking, and mass weaponization. 

Streamline Onboarding 

Onboarding new businesses is a challenging task for companies and customers. The address verification ensures the company’s legitimacy and cross-checks its owner’s locations to streamline the onboarding process. Furthermore, verifying the business address guarantees real-time verification, which provides instant results to entities. 

Efficient Compliance 

During the business verification before onboarding, companies must comply with various national and international regulations. Compliance with these obligations can not be done without address verification. Verifying business addresses ensures the company complies with the country’s laws. Companies must uphold industry standards and obligations adequately; validating the company addresses guarantees these simultaneously.

Business Address Verification Prevents

Industries Must Verify Business Addresses

Business address verification is necessary for various industries to comply with regulations, improve customer experience, and mitigate fraud. Especially sectors that fall under the AML/CFT obligations that must verify the business address before onboarding, including: 

  • FinTech 
  • E-Commerce Marketplace 
  • Lenders 
  • healthcare 
  • Government and Public Services 
  • Online Retailers 
  • Banks 
  • Financial Industries 

Overall, business address verification is essential for all businesses that have to comply with regulations such as 5AMLD, Know Your Business (KYB), and Anti-Money Laundering (AML). All sectors under these obligations need global address verification and know whom they are doing business with. 

Best Practice for Business Address Verification 

Companies can automate the business attestation process by using online address verification. You can empower the organization’s B2B compliance techniques before starting a relationship with cutting-edge advanced technology. Following are the derivatives you should uphold before business address verification: 

Document Gathering 

Companies must collect the required information for the address verification of the business. The essential papers can be government IDs such as registration licenses, utility bills, residence permits, mortgage statements, or other official papers. Companies should also ensure that the documents are authentic and valid. They should also check for any discrepancies in the records. Finally, they should ensure the documents are collected and stored securely.

Note- Acceptable documents depend on the government policies and jurisdiction of the industry. 

Document Verification

Only creating a profile with the documents is not enough for onboarding companies have to validate the customer biodata. For that, they can verify the documents by checking the security features of the papers, such as fonts, signatures, borders, etc. This ensures the papers submitted by the business are not counterfeit and original. 

Note- Security features depend on the nature of the documents; the papers can change these.  

Document Validation 

Once the documents are verified, validation is necessary to confirm that the data written on the papers is original. For that, companies can use Optical Character Recognition (OCR) technology, which assists them in converting document data into computer-readable text. After that, companies use converted data to cross-check against the government databases to ensure the same information about the company is available in their backend. 

Note- Use a secured database to store company information to avoid data breaches.

Document Screening 

Companies that have to verify the address of their partner business must comply with various rigid obligations. To comply with these, it is essential for them to screen submitted documents against the sanctions list. The watchdog databases can be government or third parties such as AML/CFT, Politically Exposed Persons (PEPs), or Special Interest Entities (SIEs). Cross-referencing with these databases ensures the company is not involved in illicit activities. 

Note- Don’t forget to screen against the adverse media sources.

Challenges of Business Address Verification

Despite various advantages, companies face significant challenges during compliance with address verification. You must be aware of these obstacles during the address verification of the company and its ultimate beneficial owners‘ location. Below, we research some issues:

Data Privacy 

The companies must submit essential documents for address verification. Most of them are confidential data about companies, outflow of this will cause various scams. The onboarding company must store the business data in a secure cloud to protect it from fraudsters. They can use this information to open an account with counterfeit data. 

Error Prone 

Address verification is challenging, and differentiating false positives from these is complicated. Over-validation is a time-consuming procedure and creates a hindering experience for clients. Manually address verification also does not provide accurate results or eliminate false positives.

Expensive

Address verification is time-consuming and costly for companies. To get adequate results, your business has to collect the information, verify its biodata, and check financial statements, including various other derivatives that cost a significant amount to the company.  Then cross-checks against third-party databases also charge, which creates the address verification burden on the company. 

Role of The KYB in Business Address Verification 

The KYB is the ultimate data provider for business onboarding. We provide 250+ databases with over 301M companies registered information. The KYB offers global address verification for businesses to expand worldwide. With the help of The KYB, you can collect business information through customizable techniques. This supports you in compliance with various industries according to their requirements.  

Furthermore, you can keep the company’s records in centralized reports. The KYB provides a secure place for the seamless onboarding operation. With the advanced perpetual KYB, we provide instant alerts for enhanced business due diligence and safeguard the bottom line of financial fraud.

Contact us to know more about it.

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