Why is out of date data our primary source for compliance reviews?

Oct 17, 2023
Jan 20, 2024
min read

During sales conversations, our sales team often gets drawn into what we’ve coined “the data games” - a fight for survival between know your business (KYB) providers based purely on the availability of data. The prospective client normally tasks us with pulling up information on the most obscure companies. They then conduct a simple comparative analysis between the providers and their current solution and then make a decision.

Now, (not trying to boast) but our 98% match rate and global data coverage means that we will more often than not satisfy the request. However, the reason this has become a source of frustration is because there is one data source which is so critical to the success of KYB which gets overlooked in these proceedings - the business owner.

The reason we believe the business owner is such a critical data source comes down to many reasons but ultimately they are the most up-to-date source available. They can also provide more accurate information, can provide additional context and clarification, are more flexible to your specific requirements and provide a verifiable, human-side to the onboarding process. A data source, even one that is up to date can’t provide any of this.

This raises the question, why do we continue to persist on using out of date data as our primary source of KYB and what would things look like if we embraced the power of the business owner?

Why do we use out of date data?


One part of relying on data sources comes down to necessity. Some industry regulations or country-wide legislation will require companies to show that a data source has been checked to verify the information when onboarding a company. 

This impacts businesses of all sizes; fledgling start-ups integrate with a data source so that they can ‘check’ the compliance box while larger enterprises have an array of data sources to mitigate risk during onboarding. However, in both instances, there are flaws. Compliance reviews should never be seen as a tick box exercise while using multiple data sources may just be returning the same out-dated inaccurate information. 

If the use of a data source is mandated, then a business must comply, but that does not mean it should be their only point of reference.

Early Indicators

Another reason data sources are relied on is that they can provide clear warning signs of bad actors. The availability of data (or lack of) can indicate, for example, a fraudulent merchant who is trying to join a marketplace or a money laundering front that is trying to get access to a payment service provider.

In both these cases, financial data, online presence information and group structure can all lead to questions being raised. For example, we recently reviewed a case where a Brazilian company was affiliated to a branch of a global designer fashion brand but their majority owner was a Cypriot company that had no online presence.

The example above would raise eyebrows but is it right at this point to reject the onboarding company without exploring further? You could continue to hit more data sources trying to pull up more information but that would likely provide further confusion. At this point obtaining information from the business owner instead would be more effective - they either alleviate or confirm your concerns.

Review Foundations

Data sourced information can also be used to form the basis of a compliance review by providing a framework to work off. If data availability is consistent then you only need to gather some additional parts to complete your review. 

This is a compelling use for data sources but there are two issues: the data might still be inaccurate and what happens for example when you onboard a client from a different country and the data availability changes?

The ultimate set-up would be having pre-configured onboarding processes which asks the business owner for the information you can’t obtain. Then, on a case-by-case basis request more information from the business owner if certain data points aren’t available or require further investigation. However, the reality of setting this up and maintaining it requires an ongoing clear view of the data availability across all the countries/industries you are onboard from.

Why is the business owner’s input so important?

Data sourced information has its values but it always runs the risk of being not fully accurate. The business owner will always be the premium source of information. There are four reasons we believe this:

  • Accuracy and timeliness - Data sources are littered with mistakes, trading addresses are put down as registered addresses, the same directors are listed multiple times and we’ve even seen employee numbers vary from less than 10 to over 100 for the same company. The business owner will provide the most accurate and up to date information. If they can’t then that is a clear point for concern.
  • Completeness - Building on the previous point, data sources may also return blanks. This is especially prevalent in certain countries where the in-depth coverage simply does not exist. Compliance reviews shouldn’t be restricted due to this.
  • Flexibility - Every company who is onboarding customers will have specific requirements but a data source can’t provide the flexibility to match them. However, a business owner can adapt their answers and provide additional levels of clarification over more contentious points of review. 
  • Trust and verification - Dealing with the business owner provides a human side to the processes. In a time where a fraudster’s capabilities are being increased by the growth in AI functionality, utilising the business owner becomes even more valuable. It provides a verifiable, human side to the onboarding process.

It’s clear (or should be) that the business owner is a vital source of data. However, it is imperative that onboarding processes are not made overly manual, and that the individual’s time is not wasted with irrelevant questions. Data sourced information still plays an important part; finding a solution that balances the availability of data and the importance of the business owner is critical.

What could the solution look like?

Pre-customised and configured onboarding flows that react to data availability, utilising the business owner to fill in the gaps and provide the key bits of information that a data source cannot. However, there are layers of complexity that are weaved into a solution like this:

  • Understanding your coverage/requirements: This is one of the biggest challenges. Initially you MUST understand what data you require to approve someone - it’s a flawed process if you can’t concretely say “I need data point X, Y, and Z to approve a merchant”. Additionally, to have good oversight in your data coverage you need multiple existing examples to build a picture of where the weaknesses lie; maintaining this and updating your onboarding processes respectively can be incredibly time consuming.
  • Balancing structure and flexibility: Having pre-configured onboarding flows is important, but you don’t want a situation where they are so disparate from each other that the review framework is not consistent. The majority of the information obtained needs to be consistent across all the onboarding flows so that your compliance team can effectively complete their reviews. Additional flexibility needs to be available so that specific questions can be asked when onboarding a more complex edge case.
  • User engagement: You also cannot sacrifice user experience. Having an engaging onboarding flow reduces the chance of your prospective customer churning (abandoning the process) and can decrease time-to-revenue. Regardless of the data availability the user should be completing an engaging and efficient process - not having to work through page after page of an unbranded and largely irrelevant onboarding document.
  • Available data sources: This may seem like a given but you also need integration to data sources so that you can supplement the information being provided by the business owners. Maintaining these relationships with multiple data sources is time consuming and expensive but essential. Remember, data sources still provide a necessary framework and a base level of information but the business owner enriches it.

Final Thought

Detected offers an onboarding experience that prioritises the business owner. We focus on achieving fast, safe and user-friendly business onboarding. We combat data inefficiencies by pre-configuring your onboarding flows to ensure that there are no discrepancies. 

A user arrives on an online onboarding flow which is highly specific to the country they are from and the product they are signing up for. They quickly move through the flow answering questions that only relate to them - there are no irrelevant sections or non-applicable questions. ID verification, documents and custom forms are all completed in the same place.

Throughout the process the onboarding customer can access the flow from one link at any point. Progress is saved and when more information is requested there is no back and forth between emails - they simply log back in.

The business owner’s input combined with the global coverage obtained from our data sources generates a single source of truth. We understand the nuances and variation within the data and help you set up the correct configurations to capture all necessary information. This ensures that your compliance team receives a comprehensive and complete profile to review, in the back-end dashboard, and makes sure you stay compliant and safe.

To keep up to date with Detected and the developments in the KYB space sign up to our mailing list or book a demo today to understand how Detected can bring value to your company.

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