Company Verification

There are signs that you should treat with caution. 

For example, these factors about the business are red flags:

• Missing or conflicting contact details
• Address details are suspicious (Google Maps shows a different office location/building than the company’s website) 
• Lack of employee profiles or post history on LinkedIn
• There is very limited or no social media presence
• The company uses a strange email domain
• Your Google search shows a history of fraud (about the company or its previous directors)
• There’s a lack of employee profiles or post history on LinkedIn
• Owners refuse to provide extra information about the company 
• There aren’t any reviews about the company online

A Know Your Business check, or KYB check, is the same company verification process. However, this term is used more often among regulated companies (banks, real-estate firms, insurance companies, crypto platforms, etc.) where such checks are mandatory. So, the scope of a KYB check depends on the company and its internal requirements, combined with the industry and the jurisdiction in which it operates. 

To assess another company and verify its legitimacy, you need to review key documents like its registration details, address information, business licenses, financial records, and ownership structure, which means that you need to verify the overall background of the company and all of its related persons. 

For regulated entities, this also includes conducting Know Your Customer (KYC) checks on beneficial owners and screening Anti-Money Laundering (AML) databases, such as sanctions lists. These checks apply to various stakeholders, for example, investors and suppliers.

One of the most popular ways to verify another company’s legitimacy is to follow a four-step approach:

1. Search the company’s registration details (this could be done via an online search or using government databases, such as the  Better Business Bureau’s search tool). 
2. Assess the company’s main contact data (this involves verifying its physical address and other details, like phone number or email address). 
3. Conduct an online presence assessment (review the company’s website, social media, press releases and mentions in the media, LinkedIn posts and members that list the company as their working place, etc.) 
4. Look out for red flags that indicate fraud (these are potential signs of forgery, such as misspelled information, adverse media, bad financial health, poor reputation, and similar AML red flags). 

There are a few key reasons why company verification is vital. For example:

• Helps prevent fraud. This is important for high-risk sectors like banking and insurance, where non-compliance can result in hefty fines. 
• Ensures compliance with KYB. Conducting company verification ensures compliance with KYB, or Know Your Business (KYB) verification. 
• Mitigates various risks. Company verification helps minimize chances of financial crime and helps ensure that all business operations are transparent. 
• Improves the decision-making process. By evaluating potential business partners, companies can make informed decisions that help ensure their own stability.

Ultimate Beneficial Owners or UBOs are individuals who hold at least 25% of a company’s shares. The definition differs slightly based on jurisdiction. In general, UBOs are called this way because they have ultimate control over a company. They are the people who ultimately control a legal entity, either directly or indirectly. Consequently, as part of the company verification process, UBOs need to be checked and verified as well.