AI in KYB: Integrating Accurate Data for Smarter Verification Solutions

In a world where compliance is mandatory and business onboarding speed connotes competitiveness, Know Your Business (KYB) has become a necessary step in due diligence. But nowadays, KYB is necessary to ensure risk mitigation. Therefore, many companies are now looking into AI-enabled KYB solutions.

But there’s a caveat. Any AI-enabled KYB system is only as good as the input data it uses. If your KYB data is missing, incorrect, or outdated, expect unreliable output from the AI, completely undermining the purpose of automation.

This is the exact problem that every industry sector is struggling with, where they are trying to bring AI-based KYB up and running, but trying hard to power it with very balanced and structured data, and make the integration onto the systems smoother.

The Real Problem: Incomplete and Inaccurate KYB Data

KYB in AI suggests a series of automated efficacious and efficient risk management and recognition tools. But the core problem remains:

Most organizations lack clear, structured and reliable KYB data for feeding into their AI systems.

A survey in 2023 by the Process Excellence Network indicated that only about 12% of all organizations believe their internal data quality is ‘sufficient’ for an AI initiative. In the context of due diligence, this shows different facets:

• Incoherence of company registry data among jurisdictions
• Unclear Ultimate Beneficial Owner (UBO)
• Missing or outdated sanctions and watchlist, and regulatory enforcement data
• Unstructured sources of adverse media 

This fragmented picture forces compliance teams to manually piece together entity profiles, negating the speed and scalability that AI promises to render. Organizations can also leverage commercial databases who offer specialized and structured UBO information to bridge the gaps in UBO identification.

Why Data Accuracy Matters in Know Your Business

At the core of KYB lies a simple premise: if the data you’re verifying against is inaccurate, outdated, or incomplete, your compliance framework is compromised. Like onboarding a shell company’s beneficial ownership details may not always be available can cause fines, reputational harm, and regulatory backlash.

Accurate verification data is especially vital because:

• Regulators demand it: Any organization is compelled to present compliance through document proof to regulators.
• Fraudsters exploit gaps: These are opportunist entry points for illicit activity from any old registry or loophole.
• Business trust depends on it: A reliable KYB earns trust and establishes confidence among stakeholders.

Agentic AI and Data Accuracy in Know Your Business

By extracting directly from official registries and regulatory bodies, Agentic AI further strengthens this foundation. This reduces the risk of error, does not rely on outdated databases, and ensures that every decision is based on authenticated, real-time records.

AI Improving the Accuracy of Data for KYB

The AI methods could offset the constraints associated with manual checks and distributed systems. The new techniques guarantee accuracy in this respect.

• Automated Data Collection

Artificial intelligence performs the tasks of collating information from different trusted sources, including registries, filings, sanction lists, and disclosures, into one structured view. This may be helpful not just with reducing costs but also with reducing time and increasing efficiency during third-party onboarding.

• Entity Resolution

One of the most frequent occurrences in KYB is that duplicate or mismatched records impede efficient due diligence procedures. AI-driven entity resolution algorithms will match and reconcile data across different jurisdictions and languages, ensuring “Company A Ltd.” in one registry is not wrongfully identified in another.

• Risk Scoring and Anomaly Detection 

Machine learning models analyze patterns across thousands of data points, allowing for the identification of potentially unusual activity or inconsistencies that could lead to fraud. For example, these may include alerts on director/ UBO changes occurring suddenly or ownership that could be directly or indirectly related to some kind of financial fraud such as money laundering or terrorist funding.

• Natural Language Processing (NLP) 

A plethora of information pertinent to KYB exists in unstructured form: legal documents, news articles, or court documents. NLP furnishes AI with the ability to extract insights.

Danske Bank and the Cost of Inaccurate Data

The Danske Bank money laundering scandal is a stark reminder of what happens when accurate KYB processes are absent. More than €200 billion of suspicious transactions passed through its Estonian branch between 2007 and 2015 because the bank failed to verify beneficial owners and conduct comprehensive due diligence.

Perpetual Monitoring: AI-Driven Risk Assessments

Business verification at the time of onboarding may become useless in the long run. This is because ownership structures change, directors resign, companies enter new jurisdictions, or sometimes face financial constraints.

As a result of integrating automation (for data collection and processing) and machine learning (for pattern recognition and risk detection), critical data points can be continuously monitored: changes in beneficial ownership, company filing updates, new sanctions or watchlist entries, as well as adverse media signals. AI-powered KYB has made real-time alerts possible, replacing the reliance on regular or periodic reviews and catching even the smallest changes before they become compliance failures.

Furthermore, with AI at the heart of perpetual monitoring, KYB then becomes a system that would evolve the same way as your counterparties do, providing visibility not just at onboarding but for the entire business relationship.

The Future Outlook of Artificial Intelligence in KYB Processes

The role of AI in KYB is only beginning to unfold. Emerging technologies are set to push the boundaries even further:

• Predictive Analytics: Predicting high-risk entities before the symptoms of traditional red flags show.
• Advanced NLP: Harnesses natural language processing to mine millions of court notifications and regulatory updates across diverse languages. This enables automated extraction of compliance insights from rulings, legal filings, and global news sources at scale, ensuring no critical development is overlooked.
• AI-Driven Perpetual KYB: Not simply change-watch, but also forecasting potential vulnerabilities within supply chains or ownership structures.

How The KYB Empowers AI in Business Due Diligence

When navigating the Know Your Business, compliance has been so difficult for organizations owing to the presence of fragmented tools that provide no holistic view of compliance. Due diligence becomes an extensive toll of manual labor, disrupting the entire onboarding cycle, increasing the risk of missing red flags.

The KYB sets the foundation for AI-driven verification by providing accurate data points from reliable sources within a unified platform. With The KYB, you can:

• Access up-to-date registry data from the regulatory authorities in over 250 jurisdictions.
• Obtain AI assistance in identifying Ultimate Beneficial Owners (UBOs) and complex ownership structures within seconds.
• Automate continuous checks for sanctions, PEP, adverse media, and regulatory enforcement data.
• Initiate perpetual risk monitoring that flags ever-changing risk alerts as events occur.
• Lastly, it allows businesses to streamline compliance workflows through an API or a simple-to-use dashboard. 

Best of all, The KYB lets you automate as much or as little as you see fit for your business while using AI to ensure accuracy, speed, and reduced manual effort. By combining automation and continuous monitoring, we help organizations stay one step ahead of the continually evolving risk and regulatory expectations.

Ready to see how AI can transform your KYB process? Request a demo today.