Introduction : Know your investor verification how KYI helps find the right investors

In today’s technology-driven world, financial processes are constantly evolving and updated through digital procedures to simplify transactions. However, as technology evolves, so do criminals. They tend to stay updated with the latest trends in the market and develop more creative ways to perform illegal transactions. They carry a high risk of sensitive data being compromised. This not only applies to businesses and clients but also to investors. Companies need to verify the firms or individuals investing in their business. Thus, Know Your Investor verifications need to be followed.

What is Know Your Investor Service?

Know Your Investor (KYI) is the process of verifying the identity of a potential investor. Investor verification services are helpful in ascertaining a client’s original sources of funds, revenue, and tax information. The past few years have seen a dramatic shift to digital platforms, which makes it very important to authenticate online investors. Sometimes, proper KYC policies are neglected. So, online investor verification also provides KYC, as many customers are switching to merchant accounts for investment. However, this also enables illegal fund transfers to some extent. Therefore, a technical solution would allow investor onboarding to be trouble-free.

Importance of Online Investor Verification Services for Businesses

Digital business is gaining popularity, and enterprises are constantly finding new avenues for investment. Nevertheless, the increase in financial crimes might dismay investors from investing as several firms or individuals use forged data for investment. This impacts a company’s monetary growth adversely. So, there is a legal requirement to perform online investor verification and confirm their login information. In addition, the COVID-19 pandemic has negatively affected the international financial market. However, it has also created more avenues for investment, with several investors. Therefore, they must go through investor accreditation verification procedures.

There are also many cases of money laundering activities. Unauthorized fund transfers are also very typical today. Consequently, most investors are unwilling to invest. Recently, a chain of fraudulent investments was confiscated in Bulgaria. It amounted to between 10 to 15 million Euros. Thus, controlling illicit transactions might not be possible without proper investor authentication. International authorities require businesses to comply with KYI as much as KYC. Therefore, companies should not only implement comprehensive KYI policies.

5 Things to do to get to Know Your Investor

      There are some steps that all businesses must take to verify investors.

  1. Perform a thorough background check of potential investors. 

This includes verifying their basic identification information, such as their names, identity documents, contact details, and residential address. This way, businesses can confirm whether the investor is who they claim. Investigations can go deeper, such as delving into the history of the investor. This includes checking the legal records of investors and authenticating their social media accounts.

  1. Verify investor background data. 

This would be done at the time of the investor’s onboarding. This would include authenticating their financial position, net worth, tax records, business address, business registration documents, and income statements. This is done to ensure that the investor is legit with solid credibility.

  1. Investigate investors’ risk profile. 

Businesses should examine the risks associated with the investor and their risk-taking ability. Those with numerous assets and fewer liabilities are likely to take high risks. Whether the investor expects a high rate of return should also be checked. This way, companies would better understand what to expect from the investor and if they work with them.

  1. Understand the client’s investment objectives. 

Investors would have differing ideas for their investment. In some cases, they may wish to keep funds secure. Others may want to increase their funds or keep income tax burdens minimal. This would give businesses a clear idea of the investor’s work.

  1. Investigate their sources of funds. 

Companies should also check where investors are obtaining their funds from. It is essential to ensure the inventors’ finances are from legitimate sources to ensure that investors don’t have a criminal history.


Thus, it is agreed that Know Your Investor solutions are as essential as KYC and KYB. This is because an increasing number of businesses work with external investors, which creates the necessity to implement know your investor  solutions. This ensures that the investors providing funds are legit and not involved in any illegal activity. Thus, companies can feel secure that they would not be associated with investors who are not authentic.

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