The Human Dangers of Ignoring Know Your Business (KYB) Protocols
Do you know the hidden risks of ignoring Know Your Customer (KYC) and Know Your Business Protocols? While costly fines are a solid reason for compliance, the heart of each AML, KYC and CDD mandates is the intent to eradicate the very real, pervasive human consequences of financial crime. From human trafficking to the loss of significant personal funds, funding the drug trade, and terrorist financing, AML and KYC protocols serve as a valuable safeguard against serious harm.
Below, we’ll take look at just a few of the dangers associated with ignoring KYB mandates. Read on to learn more.
1. Facilitating Financial Crimes
Financial crimes is one of the most direct and prolific risks associated with ignoring customer verification regulations. Simply put, when you don’t know who you’re working with, be it customer or business partner, you leave yourself open to the threat of being associated with money laundering, fraud, and other illicit financial activities. Being associated with such activities, eve incidentally, can have severe consequences for individuals and society as a whole, with illicit funds being used to grow several of the activities listed above.
2. Undermining Consumer Trust
Neglecting KYB protocols can erode consumer trust, often leading to human consequences. When businesses engage with unverified or potentially fraudulent entities, consumers are also put at risk. They may fall victim to scams, receive substandard products or services, or even have have their personal information compromised for nefarious purposes. Such occurrences not only leave you open to legal action, but can cost you dearly in terms of your overall reputation, can erode public trust in financial systems, and can eventually lead to serious long-term misalignment issues.
3. Exacerbating Human Rights Violations
KYB protocols play a crucial role in preventing businesses from accidentally becoming entertained with entities involved in human rights violations. When businesses ignore these mandates, they open thee door to the risk becoming entangled with organizations or governments that have a track record of human rights abuses. Feeding into the criminal networks and activities that allow practices like forced labor, child exploitation, or environmental degradation not only puts human lives at stake across the globe, but also pulls into question your commitment to transparency and vetting partnerships for the public and market as a whole.
4. Amplifying Health and Safety Risks
In certain sectors such as pharmaceuticals, food production, and manufacturing, ignoring KYB protocols can even lead to health and safety risks for individuals. While we often tend to think more of the financial side of things, the reality is that when businesses collaborate with unverified suppliers or partners, they run the risk of compromising the quality and safety of their products. Substandard pharmaceuticals, for example, can have life-threatening consequences, where poorly constructed safety site gear may not actually be able to stand up to the ratings it claims to have.
5. Fuelling Corruption
Finally, the entire reason KYB protocols exist is to overthrow the ability of malicious actors to exert influence and wreak havoc.When businesses engage with corrupt partners or governments, they may become complicit in corrupt practices and accidentally reroute much needed resources from the public. This, in turn, negatively impacts the well-being of countless individuals who rely on these services for their basic needs. On a much more macro scale, allowing your oversight to allow criminals to operate undetected isn’t just dangerous, it’s negligent. Adding every layer of security possible is necessary to tackle corruption as effectively as possible, and KYC/KYB methods play a huge role in facilitating this.
KYB Implementation with iComply
At iComply, we know that streamlined KYB software is one of the best ways to remain in alignment with all compliance standards, avoid fines, avoid the human cost of poor security. Our modular suite of KYC, KYB, and AML products not only ensures you have everything you need to manage and maintain a wide range of jurisdictional KYB regulations and conduct risk-based assessments but also automates your customer identification and risk screening processes more intuitively than ever before.
Book a demo with our team today to learn more about iComply’s compliance solutions and discover how iComplyKYC can be customized to fit the unique risk screening needs of your organization.
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