How to Find Out Who Owns a Company And Why It Is Necessary to Know the Owner

One of the fundamental questions that compliance officers face when onboarding business clients or processing transactions involving business entities is: “Who owns this business?” This question is critical to understanding the legitimacy and transparency of a business in order to ensure AML compliance. 

Ownership transparency is crucial and helps ensure that businesses are not fronts for illicit activities like money laundering and terrorist financing.  These are the vital considerations in the regulatory landscape. 

Business ownership verification forms the backbone of AML compliance and helps financial institutions comply with global regulatory requirements.

What is Business Ownership?

Business ownership defines the legal entities or individuals who own or control a business. It includes all the legal authority and accountability for a company’s operations, strategic directions, and financial gains. 

Business ownership can be a single individual (like a sole proprietor), a group of entities (like partnerships), or shareholders in any corporation that owns shares of the company. 

Why is it Important to Know Who Owns a Business?

Knowing who owns a company is crucial for understanding the entity behind it. It helps businesses assess risk, ensure compliance with AML laws, and onboard trusted partners and investors. Some of the primary reasons for staying aware of business ownership include:

• Risk management 
• Compliance with regulations 
• Trust and transparency 
• Avoiding fraud
• Compliance with Sanction Regimes
• Customer Due Diligence for AML Compliance
• Supplier Due Diligence

Moreover, laws and regulations often require businesses to know who owns a company they are working with, as clear ownership information enhances transparency and accountability. 

Why is Know Your Business Due Diligence Required?

• AML Compliance 

AML compliance is designed to prevent money laundering, terrorism financing, and other financial crimes.

Ensuring transparent and traceable business ownership is essential for preventing businesses from being used as vehicles for illegal activities. Failure to do so can result in severe financial, legal, and reputational risks. 

By confirming the legitimacy of ownership, businesses can mitigate risks and ensure that they are not inadvertently aiding money laundering operations.

• Sanction Compliance

Sanctions compliance involves ensuring that the business and its owners are not listed on international sanctions lists, such as those maintained by the OFAC, EU, or UN. This prevents businesses from unknowingly facilitating transactions with sanctioned entities or individuals.

• Supply Chain Due Diligence 

For businesses, particularly those in sectors like finance, supply chain, or manufacturing, verifying ownership within their supply chain is a key risk mitigation strategy. This ensures that partners or vendors do not pose a financial or reputational risk.

• Risk Mitigation

By identifying the beneficial owners, businesses can assess the risks associated with transactions, partnerships, or investments. This transparency minimizes the risk of inadvertently associating with businesses that could harm the company’s reputation or lead to regulatory breaches.

• Trade and Export Control Laws

Business clients’ due diligence within the financial sector and businesses involved in international trade is also essential to ensure compliance with export control laws and trade tariffs. 

How to See Who Owns a Business

Knowing the answer to who owns a business is essential to understanding the potential risks associated with any transaction or partnership that involves a business entity. 

Businesses operating in high-risk industries and regions or those with clients and trading partners in high-risk industries and regions must be particularly diligent in verifying ownership details to avoid exposure to regulatory violations or deliberately facilitating financial crimes. 

The most authentic and reliable way to identify business owners is through official business registries maintained by the government. These registries contain accurate information about the registered name, incorporation date, and other official details about shareholders and directors, along with legal documents .

Using unofficial or unreliable sources, such as websites or third-party sources, databases may result in reliance on inaccurate or outdated ownership information. These sources are prone to errors and might lack authentic information offered by official business registries. 

Do It The KYB Way

For each entity, The KYB through its API provides data on business owners and other legal documents right from the official business registries in real-time without any delay.

Challenges with Manual Verification of Business Ownership 

A manual business verification procedure can present several specific challenges that affect efficiency, compliance, and accuracy. Some of the key challenges include time-consuming methods, such as data collection from multiple sources and cross-referencing the information.

Moreover, outdated information can lead to missed updates in regulatory requirements.

1: High Volume of Payments 

Sectors like FinTech and financial institutions process high-volume payments in global markets.  Such FinTechs that have to ensure speedy transactions can’t rely on manual business ownership. It increases the risk of human errors and delays. This is more challenging for FinTechs processing B2B Payments..

2: Global Complexities 

With different requirements and regulations, each state has a separate business registry system. Therefore, searching for verified business ownership information across multiple countries using online sources can be complicated and time-consuming, making it difficult to ensure accuracy.

3: Scalability Issues

Manual verification is a major obstacle to cost-effectively scaling a business. The reliance on human resources makes the process slow and difficult to manage, leading to higher costs, inefficiency, and consequently slow business growth. 

In conclusion, relying on manual verification in the business verification procedure can be unreliable and inefficient. This makes it a less ideal solution for today’s fast-paced and regulatory-driven world.

Why The KYB Solution is the Best Way to Know Who Owns a Business

Let’s explore why The KYB solution serves as the best verification tool in the business world.

• Real Time Data 

Know Your Business tools automatically fetch real-time data about businesses and their owners from official business registries, ensuring that the data is accurate and up-to-date. This automation eliminates the need for manual checks, providing immediate access to essential ownership details.

• Direct Sourcing from Official Registries

The KYB sources data directly from government registries, reducing the risk of fraud or errors. This ensures that the ownership details are legitimate and trustworthy, as they come from an official, verified source.

• Comprehensive AML Screening

The KYB provides comprehensive AML and Sanctions checks, enabling businesses to not only comply with Know Your Business regulations but also check the risk associated with businesses and their directors. By evaluating all potential risks, whether related to ownership, sanctions, or fraud, KYB solutions minimize exposure to regulatory non-compliance and help mitigate risks proactively.

• Custom Fit for FinTechs

For businesses in supply chain finance, trade finance, or accounts receivable, KYB solutions provide comprehensive data to verify business clients effectively. These sectors often focus exclusively on business clients, making KYB a perfect all-in-one solution for verifying ownership and ensuring compliance with financial regulations.

The solution provides all the necessary features for business verification and related entities in real-time, eliminating the need for additional compliance tools. KYB is an ideal fit for the finance and supply chain industries, which exclusively deal with businesses and need to do Know Your Business checks not only for AML Compliance but also for Risk Mitigation.

Streamline Your Identification Process with the KYB Solutions

Verifying the ownership of a business is crucial for clients’ and partners’ due diligence in order to comply with AML laws. Moreover, it ensures compliance with the sanctions regimes and prevents regulatory penalties that may be faced due to a lack of due diligence regarding partners in high-risk jurisdictions. 

A proper understanding of who owns a business helps prevent risky or illegal dealings. Additionally, businesses in the FinTech and supply chain sectors can leverage The KYB solution to verify business ownership. 

It empowers businesses by ensuring transparency, streamlining compliance, and significantly reducing the risk associated with money laundering and financial fraud. 

To see how The KYB automates business due diligence for you. Book a demo today 

Frequently Asked Questions

How to Check Who Owns a Business?

Entities can search the state’s official business registry to view a company’s registered directors and shareholders. Alternatively, use third-party databases for quick access to ownership and structural details.