U.S. community banks are under pressure to improve KYB (Know Your Business) compliance for small business accounts, especially in light of evolving FinCEN and OCC guidelines. This article explores how KYB modernization using iComply can help banks uncover risk, automate beneficial ownership discovery, and streamline business account onboarding—without increasing compliance headcou
Community banks are the backbone of American Main Street. They finance local businesses, support job creation, and deliver personalized service in ways that larger institutions often can’t. But in 2025, these same banks face increasing pressure from regulators to modernize their approach to KYB—Know Your Business—especially when onboarding and monitoring small and medium-sized business (SMB) accounts.
The Bank Secrecy Act (BSA), the Corporate Transparency Act (CTA), and updated FinCEN guidance are reshaping expectations around business verification, beneficial ownership identification, and AML due diligence. For community banks, this means a new era of regulatory scrutiny—with limited resources to meet it.
The Compliance Challenge
Unlike large banks with dedicated compliance divisions and automation budgets, most community banks operate with tight teams and resource constraints. Yet the burden of compliance is growing:
- FinCEN’s Beneficial Ownership Information (BOI) Rule now requires detailed UBO disclosures from most business clients
- OCC guidelines emphasize continuous monitoring and risk-based segmentation of commercial clients
- SMB clients often have opaque structures—LLCs, trusts, layered ownership—that require more intensive due diligence
Without the right tools, community banks may face:
- Slowed onboarding and increased abandonment
- Gaps in beneficial ownership data
- Difficulty proving compliance during audits
- Higher costs and staff burnout
Where Traditional KYB Falls Short
Manual Processes: Many banks still rely on PDFs, in-branch document scans, or email back-and-forths to collect business documents and ownership information. This is time-consuming and error-prone.
Fragmented Vendor Stacks: It’s common to see a mishmash of ID verification tools, AML screeners, and reporting systems that don’t talk to each other.
Reactive Risk Management: Without automated triggers, compliance teams may only discover red flags during periodic reviews or when alerted by third parties.
How iComply Modernizes KYB
iComply’s modular platform enables community banks to take a smarter, proactive approach to KYB with tools designed for the complexity of modern SMB verification.
1. UBO Discovery & Corporate Structure Mapping
Automated workflows parse corporate filings, shareholder data, and registry sources to:
- Identify direct and indirect beneficial owners
- Connect ownership chains and nominee relationships
- Flag high-risk jurisdictions and complex structures
2. Smart Document Collection
Customizable white-label portals guide businesses through document uploads (e.g., Articles of Incorporation, licenses, shareholder agreements) using a risk-based logic tree.
3. Ongoing Risk Monitoring
Integrate AML watchlists, PEP screening, and adverse media scanning into the KYB lifecycle. Set triggers based on changes in ownership, risk score, or business activity.
4. Edge Computing for Privacy Compliance
Sensitive data—like passports or ID documents of directors—is processed locally on the user’s device before encryption and transfer, supporting data sovereignty and reducing breach risk.
5. Ready-to-Audit Records
Every onboarding and refresh event is logged with full audit trails, timestamps, and linked source documents—streamlining exam prep and reducing regulatory friction.
Case Study: Midwestern Community Bank
A regional bank serving agricultural and construction businesses implemented iComply’s KYB module to address onboarding delays and incomplete BO data. The result:
- Reduced average onboarding time from 5 days to less than 24 hours
- Increased accuracy of UBO records by 60%
- Passed a FinCEN audit with zero deficiencies
Regulatory Outlook for 2025
- CTA Enforcement: As FinCEN begins enforcing penalties for BOI non-compliance, banks will need stronger controls to validate and monitor client-provided data.
- OCC AML Exam Priorities: Community banks should expect increased examiner focus on KYB workflows, documentation, and UBO verification methods.
- Technology Standards: There’s growing regulatory support for adopting centralized platforms that reduce fragmentation in compliance operations.
Recommendations
Community banks should:
- Review and update KYB policies to reflect CTA and FinCEN rule changes
- Replace manual and fragmented vendor processes with centralized, automated workflows
- Prioritize edge-secure solutions that support privacy, security, and audit readiness
Talk to Our Team
Is your KYB process ready for 2025? iComply helps U.S. community banks modernize onboarding, uncover hidden risk, and comply with BOI rules—without growing your team.
Connect with us today to learn how we can help you simplify small business compliance and stay ahead of regulatory change.
