Know Your Partner (KYP): What It Is and How It Can Help Your Business

Know Your Partner (KYP) means knowing your partners, that is, knowing who you are doing business with. It functions as a protection tool that seeks to assist companies in the practice of evaluating partners, analyzing potential risks. 

In the current business context, it is extremely necessary and beneficial to cultivate good relationships, based on trust and transparency. This is because, through these relationships, it becomes much more practical to prospect customers and grow in the market.  

However, many companies still have difficulty knowing which partners to rely on and, therefore, fear the risks and potential vulnerabilities resulting from an unsuccessful partnership. This is where Know Your Partner (KYP) comes in to facilitate and make this process practical and, consequently, ensure the organization’s security. 

What is Know Your Partner (KYP) 

The term Know Your Partner (KYP) is a protection mechanism whose main objective is to help companies know their partners, evaluating the potential of the relationship. That is, verifying if that partnership presents any type of risk that could leave the institution vulnerable and fragile or if it is a healthy and beneficial relationship. 

From this perspective, we can say that Know Your Partner (KYP) is a set of practices and habits aimed at promoting security and transparency in the company. Thus, it is a way to install in the company’s security culture the activity of performing checks, analyzing partnerships and, as a result of these practices, measuring the level of risks and legal conditions of the partner. 

How Know Your Partner (KYP) Works in Practice

As we have seen, this set of practices and habits has the main purpose of optimizing the process of knowing your partner to ensure transparency in the partnership. Putting Know Your Partner (KYP) into action, in the company’s daily life, means that the company – as a whole – understands the need to analyze the history and know its partners well. 

How can you access this history? Through background check solutions.

This occurs through checks that verify the partner’s profile and history, allowing the analysis of financial, fiscal, legal information and, also, verifying the suppliers, distributors, and other partners with whom that company is related. 

In addition, the practice of Know Your Partner (KYP) is already part – or should be – of any company’s Compliance Policy. That is, it integrates one of the 10 Pillars of the Compliance program that ensure your company is well protected and strengthened to combat possible scams and fraud. 

The Importance of Know Your Partner (KYP) for Your Company

Knowing that Know Your Partner (KYP) is a mechanism aimed at protecting the organization from threats and scams, we emphasize even more the importance of this process for your institution’s due diligence.

This is because this is the main practice that transforms and ensures that part of your Compliance strategy achieves even more positive results and corroborates the alignment of the company with norms that guarantee various internal and external benefits to your organization.  

In addition, partner registration is necessary to evaluate them, ensuring partnership transparency. This is because before closing the partnership, it is possible to detect potential risks that can determine the success of the relationship through Know Your Partner (KYP). 

Thus, by adopting this type of procedure, it is possible and much more practical to combat illicit acts and fraud. This is because, in this way, the organization will be prepared to prevent schemes such as Money Laundering and terrorist financing. 

See also: Supplier Evaluation: 5 Criteria to Analyze

KYP for Third-Party Evaluation

The choice of strategic partners has a direct impact on your company’s reputation, security, and regulatory compliance. See below!

Candidate Evaluation

In the case of candidates, evaluation within the scope of KYP aims to ensure that employees and candidates are aligned with the company’s values and standards.

Supplier Evaluation

For suppliers, KYP seeks to ensure that these partners meet the standards of quality, compliance, and social responsibility required by the company.

Partner Evaluation

In the evaluation of strategic partners, KYP certifies that these partners have a reliable history and are aligned with the company’s ethics and vision, also avoiding conflicts of interest.

Customer Evaluation

Customer evaluation is also part of KYP, aiming to identify customers compatible with the business profile and to assess potential financial and legal risks.

The Advantages of Know Your Partner (KYP) for Your Company

Besides being extremely important and necessary for the institution’s protection and security, Know your Partner (KYP) presents several benefits and advantages for your company and its audiences. Check some of them out here!

• Being compliant with legislation; 
• Minimizing risks that leave your company vulnerable to scams; 
• Reducing reputational risks;
• Combating fraud and scams;
• Attracting more customers who trust your work;
• Building relationships of trust that generate good results;
• Avoiding financial losses and crises. 

How to Ensure the Know Your Partner (KYP) Process Works in Your Company

First, to ensure that the Know Your Partner process works, is used properly, and generates efficient results, establish a good Compliance Program. This means building a set of rules, guidelines, and standards in the form of a Policy and putting them into practice by installing a Program with specialized members and other compliant members. 

Once this is done, it is necessary to ensure that partners know about this procedure and understand – as well as the company – the importance of carrying out this assessment. Consequently, Know Your Partner will become a habit ingrained in the company’s protection culture. 

Next, you need to check the backgrounds of your potential partners. Thus, identifying in advance any type of risk that puts this relationship at vulnerability and, consequently, the sustainability of your organization.

This can and should be done through automated solutions that, in an agile and practical way, can detect and parameterize occurrences found in this history.

Our Solutions and Know Your Partner (KYP) in Your Company

Through our Background Check solution, for example, we use the partner company’s tax ID (CNPJ) to verify all legal, financial, and judicial information of the institution being analyzed.

This process is carried out in an optimized way, in a few minutes, through a sweep of more than 200 public and private data sources.

The sources used in this sweep are diverse, but mainly we can highlight watchlists, financial status, labor debts and lawsuits, and information validation.

Through these sources and the intelligence of our technologies, it becomes possible to analyze the partner’s entire history, checking and generating in a complete and detailed way the level of each risk existing in each atypical situation found – if any.  

With this, in addition to performing the query in an automated and therefore much faster way, you also have access to real-time, more precise results that enhance and promote transparency, scalability, and security for your company.

To learn more about our solutions and understand how they boost your business, also check out our website!