How Corporate Registry Data Helps Businesses with Risk-Based Onboarding Decisions

The digital economy moves at a breakneck pace, yet the process of “Know Your Business” (KYB) has historically remained a friction-filled bottleneck. For fintechs, marketplaces, and B2B platforms, the challenge is twofold: firms and financial institutions are required to onboard legitimate partners quickly enough to remain competitive, while simultaneously ensuring that shell companies, money launderers, and hidden-control corporate structures do not infiltrate their ecosystem.

Corporate structures often hide who controls a business. Beneficial ownership information, combined with transactional context and behavioural signals, helps compliance teams understand whether a company’s stated purpose aligns with its risk profile. Without the reliable data on the corporate entities, businesses face a high risk of:

• Dealing with shell companies.
•  Impersonation attempts by fraudsters to gain illicit benefits.
• Dealing with intricate corporate structures that obscure control/ownership

The corporate registry can be the key source for solving these problems. This government-backed data source can be used to fill in the gaps, ultimately helping financial institutions and businesses make informed and risk-based decisions.

What is a Corporate Registry?

The corporate registry is a centralized database. It is the bedrock of business verification because it represents independent, third-party evidence of a company’s existence and the persons who own and control it within a specific country.

The Financial Action Task Force (FATF) Recommendation 24 requires countries to make available accurate, up-to-date basic information about a legal person as a fundamental prerequisite for identifying its ultimate beneficial owners.

The company registry records show the history and legal journey of a business. This information usually falls into several important categories:

• Identity & Registration: Legal name, registration number, and jurisdiction. These act as the “anchor” for all subsequent checks.
• Status & Lifecycle: Indicators of whether a company is active, dormant, or in liquidation. 
• Registered Office: Physical footprints that help highlight “letterbox” companies or mass-registration hubs.
• People & Roles: Lists of directors and officers, which provide the starting point for Sanctions, PEP, and adverse media screening.
• Ownership Filings: Revelations of Ultimate Beneficial Owners (UBOs), removing layers of corporate secrecy.

What Does Risk-Based Onboarding Look Like?

Within the fintechs, financial institutions, and marketplaces, risk-based onboarding refers to a strategic workflow to verify new business entities, helping them balance security and speed. This method of onboarding allows businesses to adjust verification to the level of the risks or red flags a corporate entity may have.

This “proportionate” due diligence is also embedded in global standards of anti-money laundering (AML), especially in FATF Recommendations 10 and 24, which are about due diligence and corporate transparency, respectively. These require institutions to know and implement due diligence on both businesses and UBOs. Additionally, these controls can be adjusted according to the risk factors, such as geography, ownership complexity, and overall business activity.

It’s important to understand that the goal of risk-based business onboarding is not to eliminate all potential risks. Instead, this approach helps businesses identify which corporate entities require enhanced due diligence (EDD). Corporate registries provide the primary data layer needed to perform this differentiation in a consistent and defensible way.

How Company Registries are Helpful in Risk-Based Business Onboarding

Corporate registries act as a source of trust. This is because they allow organizations to verify the identity of a business, identify potential partners, and automate decisions based on the collected risk. According to the FATF report on Best Practices for Beneficial Ownership of Companies, here’s how corporate registries facilitate the process:

Verification of the Legal Existence and Status of an Entity

The registry is considered to be an independent, government-backed source of evidence. It confirms that a business is a real legal entity. The first step in the onboarding process looks for 

• Proof of Incorporation: Verifies that the company has been legally established.
• Legal Status: Confirms the current status of a company, whether it is “Active” or if it has been dissolved. 
• Historical Data: Allows organizations to see how long a business has existed. A company incorporated only days before onboarding could potentially be higher risk than one with a ten-year history.

Identification of the UBOs

The registry of a company removes secrecy within the corporate structure and unveils the ownership (managers, directors, shareholders, and UBOs).

• Transparency of Control: Registries have data of directors, officers, and shareholders.
• Mapping Structures: Registry data enables organizations to build maps of complex corporate structures to identify natural persons behind layers of legal entities.
• UBO Registers: In addition to corporate registries, many jurisdictions now maintain dedicated registers of beneficial owners that can be used for cross-checking during Customer Due Diligence (CDD).

Triggering Automated Risk Signals

Modern onboarding systems can pull data directly from registries to feed into a “risk scoring” engine.

• Automated Validation: IT systems conduct basic checks when registration takes place; one such example is the validation of tax identification numbers.
• Anomaly Detection: Present registry systems can also automatically detect “abnormal variations” in a company’s data. For example, large transfers of ownership can trigger an alert for further investigation.
• Public Red Flags: Watchlists are immediate red flags, triggering Enhanced Due Diligence (EDD) measures.

Facilitating Cross-Checking and Verification

Business registries are a central data source that allows firms to ensure information is accurate through comparison.

• Multi-Pronged Approach: Firms can cross-check business information against the registry and other sources (like tax records or bank data) to find discrepancies.
• External Reporting: In some countries, if an onboarding entity (like a bank) finds that its records don’t match the registry, it is required to report this discrepancy back to the registry authority to resolve it.

Continuous Monitoring and Reevaluation

Due to the non-static nature of risk, tracking changes in the business registry remains a crucial thing.

• Ongoing Accuracy: Registries are used for ongoing monitoring. They help ensure beneficial ownership information remains “adequate, accurate, and timely” throughout the business relationship.
• Warning Indicators: Some registries, like Sweden’s, use a “warning triangle” flag to alert anyone looking at a legal person that the registry has reason to believe its information is incorrect. This serves as a direct signal to use caution during onboarding.

Deterrence and Enforcement

The mere requirement of registry filing serves as a deterrent to criminals.

• Dissuasive Sanctions: Companies that fail to provide accurate information to the registry may face fines, “locking” of their registry sheets, or even restrictions on their ability to incorporate. 
• Personal Liability: In some cases, a company’s representative can be held liable for providing false information.

How Registry Information Is Converted into Actionable Risk Signals

The true value of this data is realized only when it is translated into a structured risk model. Raw data points must be converted into “risk signals” that feed into a scoring engine.

FATF research suggests that jurisdictions using a multi-pronged approach—combining registry data with other sources—are significantly more effective in preventing the misuse of legal persons. This leads to a number of automated decision paths:

1. Low Risk (Auto-Approve): Entities with long-standing history and clear ownership are fast-tracked for a seamless experience.
2. Medium Risk (Request Info): Applicants are diverted to “step-up” verification, such as providing limited account access until more documents are uploaded.
3. High Risk (Enhanced Due Diligence): Complex cases requiring a senior compliance officer sign-off and deeper investigation.
4. Prohibitive (Decline): Immediate rejection if the registry confirms a fundamental mismatch or prohibited legal status.

Implementing Practical Decision Rules

Teams can begin automating their KYB process by implementing a set of clear decision rules. For example, in Spain, failure to deposit annual accounts can result in a registry sheet being “locked,” which serves as a clear prohibitive signal for onboarding. Common rules include:

• Status Rule: If a company’s status is anything other than “Active,” the application is automatically stopped.
• Recency Rule: If incorporation occurred < 90 days ago in a high-risk sector, it can trigger Enhanced Due Diligence.
• Management Rule: If a director was changed within 14 days of the onboarding request, there is a need for manual review.
• Transparency Rule: If UBOs cannot be reached after two layers of ownership, the situation will require manual chart uploads.
• Conflict Rule: If the data from the registry conflicts with documents provided by users, the registry data may be considered misleading.

Navigating Challenges of Corporate Registry During Onboarding

While corporate registries are useful, they are not perfect. One major challenge is that information is often not adequately or actively verified by the registries themselves. To mitigate these gaps, companies should:

1. Adopt a multi-source verification strategy by combining registry data with third-party risk intelligence and bank account registers where available.
2. Use customer-declared information and cross-check it against registry filings to identify inaccuracies.
3. Maintain enhanced measures for companies with foreign ownership or directorship, as cross-border investigations are often more complex and time-consuming.

Make Risk Based Onboarding Easy with The KYB

Turning corporate registry data into risk-based decisions is the most effective way to scale KYB operations without compromising security. However, not all registry data is complete or easy to access, and checking national databases manually can take time and lead to mistakes. Organizations need a dependable way to check and combine data from complex global corporate structures.

The KYB makes this process easier by providing a single, trusted source of corporate registry data straight to compliance teams. It helps with KYB, AML, and fraud checks while offering detailed insights into corporate structures. This helps businesses quickly spot potential risks. With coverage across hundreds of jurisdictions and millions of companies, The KYB allows organizations of all sizes to assess risks faster, more accurately, and at a larger scale.

Book a demo today and make informed business decisions before scaling your business.