How to validate a business customer is real

How do you know if your business customer is real and how you can be 100% confident you're only onboarding legitimate business customers? 

In an increasingly digital world, it's becoming more and more challenging to know who you are doing business with. Working with a new business without checking if it is legitimate can expose your business to money laundering, fraud, account takeover, and even terrorist financing—not to mention non-compliance penalties.  

To protect your business and stay compliant, you must verify that your customers are legitimate businesses before you start working with them. 

But in today's competitive market, businesses face high pressure to onboard customers quickly before leads go cold.  

That's where automated business validation can give you the advantage.  

In this article, we'll explain what business verification is, how to validate whether a business is active, and how you can seamlessly integrate business validation into your onboarding process.  

What is business verification? 

Business verification is the process of gathering and verifying information about a business to determine whether the business is active, who the beneficial owners are, and what level of risk the pose.  

Business verification should be carried out as part of the onboarding process before you provide any products or services to the business customer, and then at regular intervals to check that the beneficial owner/s profile hasn’t changed, and the company stays active and legitimate. 

This process is an essential part of Know Your Business (KYB), and is a critical step in detecting the risk of money laundering and terrorism financing protecting your business from the reputational and financial cost of fraud.  

Successful KYB relies on accurate and valid business data such as company name and company number, to match and verify the beneficial owner/s of the business.     

How to validate a business is real 

The first and most critical step of business verification is validating that a business is real and active.  

Let's say a business customer registers for your services through your website. During the online registration or application process, you can start gathering business information by asking for their company name, company number (ACN), business number (ABN), and other details.  

You can then check this information against business data sources to verify the business name, ACN, ABN, whether the business is active, and much more.  

This helps you validate that the business is legitimate before you check the beneficial owner's saving you time and effort.  Once you know you are dealing with a valid business you can then check the beneficial owners to determine if you want to provide them with any products or services.   
 

Speed up your business validation with automation 

Validating businesses manually is time-consuming and overwhelming for any team, especially when onboarding many customers daily or weekly.  

The good news is there are tools to automate and streamline the process, saving you time and improving your customer experience. 

Loqate's Business Validation seamlessly integrates business validation as a single data field within your online application or registration form. For reliable results every time, the tool validates business information against the most current, authoritative data sources from the Australian and New Zealand business registers. And because the validation is in real time, there are no disruptions to your onboarding process improving conversion.