Win the Fight Against Fraud and Synthetic Businesses

Some credit union leaders wonder if the extra steps are necessary, however business member due diligence exists to protect the credit union. In this era of deep fakes and a seemingly never-ending onslaught of fraud, due diligence should be viewed as a requirement that is as essential as liquidity and credit quality. 

Fraud is Rising, Due Diligence is Essential
The good news is there are many opportunities to reduce the time spent on so-called “know your business” efforts, which frees up credit union staff to make loans, offer new products, and provide exceptional service to profitable business members.  

At its most basic level, the Financial Crimes Enforcement Network (FinCEN) requires financial institutions to identify and verify the beneficial owners of a potential business customer or, in the case of a credit union, member. Specifically, FinCEN requires financial institutions to: 

• Identify and verify business members and their beneficial owners 
• Understand the nature and purpose of member relationships 
• Monitor accounts for suspicious activity on an ongoing basis 

Why Manual Checks Fall Short 
Traditional know your business (KYB) methods are manual and time consuming. A credit union employee might manually check one or more secretary of state websites, in addition to sifting through Uniform Commercial Code (UCC) portals, performing rudimentary web searches, and gathering documents like articles of incorporation or tax ID. A manual method is not only slow but also introduces the risk of human error and inaccurate results.  

A web search might retrieve a Better Business Bureau review or show a star rating, but it will not identify any fraud risks to a credit union. This kind of search might not even give a definitive answer on whether the business is active.  

These legacy approaches were not designed for modern fraud patterns or today’s expectations for automated and secure digital onboarding. As a result, KYB reviews normally take days, or even weeks, to complete, creating friction for legitimate businesses and operational strain for compliance teams. 

Automation Delivers Speed and Accuracy
By comparison, today’s automated systems can return results instantly. Providers often have direct data feeds from governmental and third-party sources. In some cases, a business can be auto approved for an account. KYB providers can offer: 

• Business existence and status via secretary of state filings across all 50 states 
• Verification of beneficial owners and associated individuals  
• Screening for terrorist watchlist and politically exposed person indicators 
• Tax ID verification and related identity checks

More complex searches can include address-risk analysis, which flags non-commercial, non-existent, or suspicious addresses; and web presence analysis, which identifies risk indicators such as newly registered domains, broken links, or placeholder language that may signal shell or synthetic businesses. Advanced searches also can uncover adverse media, litigation, UCC liens, and bankruptcy filings.  

Confirm the Person Behind the Screen
In an age of deep fake AI creations, emerging technology can even offer “liveness” detection to help verify whether an individual opening a remote business account is an actual human. Some examples include active liveness, a test that requires a user to perform specific, real-time actions that a deep fake cannot easily replicate, like nodding or blinking.  

Credit unions can use the time saved from automated searches to ramp up their business onboarding without adding employees, even as application volumes grow. This allows them to shift experienced reviewers’ focus to higher-risk or complex cases, rather than low-risk reviews, and improving business member experience by approving legitimate businesses faster. 

See Business Verification in Action
Credit union leaders often share stories of businesses approved for accounts after insufficient investigations, leading to big losses when those businesses cashed bad checks and left town before they could be caught. An automated KYB solution can pay for itself by helping credit unions avoid those fraud losses.  

Corporate Central offers an automated KYB solution called, Business Verification. It provides fast, accurate information that can help a credit union confidently and quickly approve new businesses for accounts. Business Verification is offered through Corporate Central’s Beastro member platform. If you are ready to automate business onboarding, let’s talk. Contact Corporate Central today for a personalized demo of how Business Verification through Beastro can work for you.