Know Your Business or KYB is a due diligence process that makes it compulsory for financial institutions to verify the identity of corporate clients and their beneficial owners (UBOs).
More specifically, KYB verification is part of Anti-Money Laundering compliance that entails the confirmation of the following company characteristics:
- Registration and business license: confirm that the business is real and legitimate.
- Identify the directors and other beneficial owners (UBO): to do this, you must first conduct a Know Your Client (KYC) check.
What are the challenges of Know Your Business (KYB) in the MENA Region?
Below we discuss the various reasons that make conducting a KYB check difficult within the MENA region.
Restriction of Information
The Middle East has strict limitations on obtaining non-publicly available information. In addition to this, stringent regulations regarding the access of the data necessary for KYB checks and the common practice of offshore registration and free- zone entities have made collecting company info even more difficult.
Free-zone entities are highly prevalent within the Middle East, particularly the United Arab Emirates (UAE) which has more than 50 free trade zones within its borders. These zones attract foreign investors by offering preferential tax and customs rates, and they operate under unique regulations and jurisdictions. Because they operate under separate laws, they are not subject to federal commercial laws which further increases limitations on the type of information you can access.
Furthermore, free-zone jurisdictions offer complete confidentiality regarding ownership rights which makes it extremely difficult to collect data on beneficial owners - especially since they guarantee no disclosure of Ultimate Beneficial Owner (UBO) to local authorities.
Different Work Cultures
Cultural differences will often play a huge role in your relationship with other businesses, especially those from other countries. This is also true for when you are trying to collect information for a KYB check.
For example, different countries from the MENA region may have different working weeks and hours. In western countries it is common to work Monday-Friday, 9 am – 5 pm. However, business hours and days may differ for the Middle East, so it is necessary to understand your client’s working culture so that you know when you will be able to reach them.
Keep in mind that many companies in the region may have different "weekends" than their western counterparts. For example, they may be closed on Fridays and Saturdays, but they’ll work on Sundays. Others may close for lunch, which splits the working day in two from 8.00 to 1.00 and 4.00 to 7.00.
Additionally, many companies may have shortened summer hours, and most government departments do not reopen in the afternoons. All of this will not only affect when you can contact your potential business partner, but also it will limit how much time you have to collect the required information. If you must visit government agencies who have limited working hours to do so or you are from another country this is especially true.
Another difficulty you may face conducting KYB checks in the MENA region is the inconsistency of technology. Although in the last few years, the Middle East has seen significant technological improvements, there are still many places that don't have essential technology.
For example, some areas don’t have VoIP, or speedy and reliable internet or even 24-hour electricity. In Egypt, a country of roughly 100 million people and one of the fastest-growing economies of the Middle East, still requires that companies store their registration data in handwritten paper registers or PDF files. Which means that the data is highly unstructured making its collection slow and complicated because someone must go in-person to obtain copies of corporate records and they must know the commercial register number or the date of incorporation to find the correct document.
These discrepancies in technology will be a significant hindrance to the collection of company data making the process more complicated, costly, and time-consuming.
There are 60 different languages in the MENA region which stretches from Morocco to Iran. The languages spoken in the MENA region include Arabic, Hebrew, Greek, Persian, Kurdish, and Turkish.
This wide range of communication not only creates a language barrier when communicating with locals it may also lead to the incorrect translation of crucial information needed in KYB. Mistranslated text may lead to the inaccurate identification of companies, or to the auditor missing essential links between companies, directors, and shareholders, making the KYB process ineffective and unusable.
Cedar Rose: The Solution to KYB Challenges
At Cedar Rose, we have found the best solution that balances access to global information with accuracy and trustworthiness. We are, of course, referring to our CRiS MENA software that delivers legally obtained verified business information from the Middle East and North African (MENA) regions together in one place.
Our CRiS MENA software is the solution to all the KYB challenges mentioned above:
Restriction of Information:
- Our database contains 20 years’ worth of research, including data, covering around 13 million MENA companies and 26 million individuals. Most with legitimate, government-issued unique identifiers such as Company or Civil Registration numbers.
- It enables Application Programming Interface (APIs) to and from other systems for instant transfer of Company Registration Data which is critical for immediate KYC compliance checks.
- CRiS permits data entry from a global network of authorised researchers, editors and users and includes functions for the Source and Intelligence Grading of information.
- CRiS translates people and company names from different languages (i.e. Arabic, Persian and Kurdish) to Latin characters making both languages text searches possible which increases accuracy for all users.
- Use it for KYB checks and due diligence research in MENA, without the need for in-house Arabic speakers.
- Subscribers can instantly download several types of reports from Credit Reports to Directorship & Shareholding reports.
- The software enables instant online ordering of 30+ types of business information reports, including KYB(Company Profile) Reports that are sometimes delivered even the next working day.
- Subscribers can instantly identify links and relationships between companies and people.
Different Work Cultures:
Remove the hassle of different working hours (and time zones) by instantly ordering various reports that include on-site visits from our experienced team of investigators including Corporate Record Reports, Site Visit Reports and Local Reputation Investigation (Source Enquiries) on a Company. Get the verified data organised in one comprehensive report and delivered within days without having to worry about working hours.
CRiS MENA can be fully integrated with your Salesforce CRM via a simple to install application, to enable our data to be visible within your in-house CRM. In addition to our CRiS MENA software, Cedar Rose offers instant KYB verification services via API. For more information on how our KYB services can be adapted to your company’s requirements please give us a call today on +357 25 346630 or email email@example.com