Safeguarding Business Processes: Advanced Corporate Screening Services and Their Advantages

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Corporate fraud is a serious risk for businesses, as it can have a significant financial impact. The Association of Certified Fraud Examiners 2022 report reveals that fraudulent activities can take up to 12 months to be uncovered and cost an average of $117,000. Companies must ensure that they are not engaging with illegal entities to avoid negative impacts on finances and reputation. Cooperate fraud comprises a significant portion of the total global fraud. In most cases, entry-level scammers and amateaurs target small companies rather than well-established banks or fintech companies. These businesses have lower levels of security and weaker firewalls, which are more easily breached than big companies. Furthermore, corporate fraud is made possible by relatively easy access to the personal data of these companies. Hence companies require a modern verification system that can facilitate a robust corporate screening background check. 

What is Corporate Fraud? Understanding its Impact

Cooperate fraud is relatively more grave than it sounds. Corporate fraud refers to the illegal activities that are carried out by a company or its employees. For instance, if an employee sells the personal data of the company to a third-party source, it can be considered corporate fraud. However, this is just an example, and there are various other types of corporate fraud that can occur. There have been examples of employees using their own companies to carry out money laundering and embezzlement. In this case, the employee is using the company as a medium to conduct illegal activities. Considering another instance, a well-established business can also conduct corporate fraud with other businesses. Criminals can pose as small businesses, even make a persona that looks real, and conduct fraud with legitimate businesses by luring them into deals such as fake investment opportunities. 

Businesses need to avoid corporate fraud as it deals significant financial damage and taints the reputation of a business in the market. A business that falls victim to corporate fraud is not trusted by its own employees and stakeholders, as it has lost its integrity by not protecting itself against threats effectively. Other businesses are also reluctant to establish relations with such companies, as there is always a threat luring that associating with businesses that have fallen victim to corporate fraud may lead to financial damage. 

Moreover, after experiencing fraud, most businesses lose their financial power and sometimes go bankrupt. There are operation disturbances and some businesses never recover, eventually shutting down. Not having enough resources to recover from a fraudlent activity deals great damage to businesses. Additionally, in most cases of corporate fraud, the financial amounts involved are significant enough to make a small business go completely bankrupt. 

Adopting Corporate Screening Services for Improved Security 

Businesses need to ensure that they are protecting themselves from external and internal threats effectively, as there is always a lot of uncertainty around how a  business might fall victim to such activities. However, most businesses are not aware of what is corporate screening. To put it simply, technological advancements in our current digital landscape have led to the development of AI and ML, which have ultimately upgraded the standards of our traditional verification methods. The majority of these solutions provide companies with effective corporate screening services that ensure that no entity goes unchecked. 

Most of the Know Your Business (KYB) systems are now much smarter and conduct verifications that are upto a 100% accurate. Be it another business that needs to be verified, or if it is a company that needs to verify its own employees, a modern business verification solution takes care of it, ensuring enhanced corporate screening. 

  • Background Checks 

Companies need to ensure that their verification system is conducting effective background checks on the entities that are being subjected to a company background check. An ideal case involves fetching all necessary background information on a company and its employees, which can then be verified against trusted sources to complete the background check. This ensures that the entity does not have any previous relations with any criminal activities or organizations. Moreover, assuring that the data is being cross-matched against all possible data sources is also something companies need to tick off their checklist. 

  • Ownership Verification 

One major concern that needs to be addressed is that companies must guarantee transparency in the ultimate beneficiary ownership structures (UBOs). This is because the majority of corporate fraud is conducted by concealing the actual people, assets, or entities that are behind it. Corporate screening finds the original ownership structure of companies, ultimately helping businesses eliminate threats like money laundering and embezzlement. 

An ideal corporate verification service allows companies to ensure that they don’t fall victim to fraudulent activities, just because they established relations with an illicit entity. Corporate screening services ensure that no illegal entities are onboarded by accurately verifying the background, assets, ownership structures, and position on international databases of an entity. As a result, companies are able to focus their assets on more crucial tasks, ultimately fostering growth and a healthy digital environment.

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Sumana Das

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