Customs, tax & compliance KYC / KYB

Know your customer / know your business (KYC / KYB)

The process of verifying, before doing business, that a counterparty really exists, who its officers and ultimate beneficial owners are, and whether it is subject to sanctions or adverse media. Tools include tax and trade-registry records, signature authorisations, licences, bank references and site visits or video verification. Banks perform KYC under anti-money-laundering law; for trading parties it is the first line of defence against fraud. The platform’s “Verified company” badge is based on this kind of document check.

Related terms

Sanctions and export-control screening

Checking whether the buyer, seller, banks, vessel and end user appear on UN, EU, US (OFAC) or UK (OFSI) sanctions lists, and whether the goods are going to sanctioned countries or prohibited uses. Banks may freeze payments that carry sanctions risk, and breaches lead to heavy fines and account closures. Because sanctions change often, screening should be repeated for every deal, watching for evasion signs such as ship renaming or switched-off AIS.

Payment diversion fraud (business e-mail compromise) BEC

A fraud in which an attacker breaks into the seller’s or buyer’s e-mail, or writes from a look-alike domain, and at payment time announces that “our bank account has changed”, diverting the money to their own account. It is one of the costliest frauds in international trade and the money is often unrecoverable. Defences: confirm any IBAN change by voice on a previously known phone number, tie account changes to two-step verification inside the platform, watch for look-alike domains and start large payments with a small test transfer.

Explained in the trade handbook

Trade handbook