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Corporate Screening – Mitigating Fraud Risks Across Industries

08 December, 2023

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The business world is experiencing major technological transformations as time progresses. Enterprises are introducing unique products that work on modern-day tech solutions. Innovation is driving the business market, regardless of industry. The stats show the tech market with the highest share in global business with AI being the top industry trend to stay at the top till 2025. With all this innovation and advancement, firms are still experiencing losses due to theft and cybercrimes. These amounts are in billions of dollars every year. 

In 2023, the e-commerce sector alone lost $48 billion to payment fraud. These digital crimes occur due to the negligence of firms towards corporate screening and verification protocols. As criminals use fake companies to lure businesses into their traps, KYB compliance and background checks are more important than ever. 

This blog will cover everything about corporate screening and will explain how it can eliminate fraud across various business sectors. 

What is Corporate Screening?

Corporate screening is the process that empowers firms to evaluate their clients’ and partners’ identities using modern technology. It involves multiple operations such as background checks, UBOs screening, registry verification, and compliance. Corporate screening works closely with business verification operations and adds a layer of security by evaluating the risk scoring for each corporation. With corporate screening solutions, firms can verify the eligibility criteria of multiple business entities, from sole individuals they employ to new partners they work with. This ensures that each interaction is safe and followed by security protocols to prevent fraud. 

The Role of Corporate Screening in Risk Mitigation

Corporate screening is integral to risk mitigation as it helps businesses evaluate all the entities involved in the firm, from existing employees to new partners. It tells firms to assess their suitability for future interactions such as employment, partnerships, or any professional relationship. Overall, it categorizes the information for informed decision-making and ensures security when dealing with new people outside of the business network. Here’s how it strengthens the business verification process:

Comprehensive Checks

The main advantage of using corporate screening solutions is its check operations, which are performed digitally using technology and data from global databases. The two main types of corporate verification checks include:

  • Background Checks

A corporate screening background check is the process organizations conduct to verify all the data provided by the individual or a company through their representative. It can be their working history, projects, public or private records, and, in the case of businesses, their credit history. It is necessary to verify all these documents and credentials through proper background checks to ensure the legitimacy and approval of the client.

  • Reference Checks

In this stage of the corporate screening operation, firms conduct reference verification. They contact all the related entities, businesses, and angel investors to gather more information about the individual or the new partnering organization. This allows firms to gain insights from the market about the data provided, ensuring the legitimacy and suitability of the entity for future business plans.  

Registration Verification

Registry verification is the third stage in the corporate screening procedure which helps businesses evaluate the registry data of businesses and individuals from legal authorities. It includes identity verification in the beginning with KYC and KYB checks. This allows firms to confirm the identity of the entity they are dealing with before proceeding to verify the registration information from government-issued licenses. 

  • Regulation and Compliance

After getting the registration information, an additional step that the corporate screening service recommends is to ensure regulatory compliance. As every sector has its specific regulatory requirements for screening, it is crucial to verify compliance, especially towards all the financial management protocols. 

Social Security Number Tracing

Tracing of Social Security Numbers (SSNs) is another core part of the corporate screening procedure. This process involves the verification of social security numbers assigned by the Social Security Administration (SSA) for security benefits and identification protocols. This is for individuals who are looking to invest a share in the business. For registered firms, the SSN becomes the Tax Identification Number (TIN). These numbers verify significant facts about the previous records and interactions in the market. Tracing them in line with global authorities can help firms uncover discrepancies in the information provided in the first place, highlighting the chances of fraud. 

Credit Scoring

In corporate screening, credit scoring or credit checks are crucial to determine the financial history of any individual or business entity. It allows firms to analyze all the financial responsibilities the client is capable of handling, and assess their stability and responsibility over the specific period. Mostly, businesses provide their credit reports that contain the relevant data for verification including their employee numbers, company history, and the latest turnover. The use of legitimate resources for businesses and drug testing for individuals is also a part of corporate screening in certain industries. This ensures a safe and stable onboarding for every new business venture. 

Social Media Screening

Social media has become a core part of our lives since everything is there on digital media platforms. To understand a company better, corporate screening procedures follow social media verification which involves the review of business and individual profiles. This allows firms to gain a complete understanding of the business offerings, their audience, interactions with other entities, and much more. Social media screeding allows firms to gain insights and decide whether the client’s way of working in the social space meets the compliance laws of their company. For instance, many businesses use digital marketing strategies that involve the use of casual and non-professional content. This causes reputational concerns and social media screening helps in evaluating all the ethical practices. 

How The KYB Can Help

Corporate screening is a process that enables organizations to make informed decisions, minimize potential risks, and ensure that the individuals they select for employment or partnerships align with the company’s values and requirements. Companies must conduct screening ethically and in compliance with relevant laws and regulations to safeguard the privacy and rights of individuals. 

With KYB’s corporate screening services, your business can ensure organizational security and complete corporate verification in no time. We empower firms to operate freely across multiple business domains by verifying clients using best-in-class tech solutions.

Also read: What is Corporate Due Diligence? What Every Business Needs to Know

Talk to our experts to get a complete walkthrough on how the KYB can help your business mitigate fraud.

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