KYB Checks for Limited Liability Partnerships (LLP)

05/04/2022
Written by: Ieuan Leigh 
 
KYB Checks for Limited Liability Partnerships (LLP)

Know your Business checks for LLPs

Understanding Know your Business (KYB) checks and who you are working with is the first essential step in any business. But knowing how deep you need to know about your client is another task. For commercial law firms, knowing the company using your legal services is often a difficult task. This is why having a practical know your business (KYB) process is essential, whether you're working with a Limited Liability Partnership (LLP), Company (LLC), or even a charity.

In essence, KYB checks allow law firms to get vital information on a company. The checks include:

  • Company name and registered number - to ensure incorporation and legitimacy
  • Company address - to ensure the company is trading and not a shell company
  • Ultimate Beneficial Owner (UBO) - to understand who ultimately owns the business
  • Persons with Significant Control (PWSC) - individuals or companies with over 25% ownership of the business
  • The officers/directors - especially for Know your Customer (KYC) and Anti-Money Laundering (AML) checks
  • Credit status - to ensure the business is in a financial position to pay for your services

What about Limited Liability Partnerships (LLPs)?

In their nature, LLPs tend to be difficult to onboard into law firms. This is due to LLPs having complex structures. For example, multiple partners can often mean losing track of who is working within the business day-to-day, who is a person with significant control (PWSC), and who is the ultimate beneficial owner (UBO).

But, the complex structures aren't all. It can become awkward keeping track of the different officers onboarded as part of the company due to the amount and the multiple emails sent around each.

How to initiate a KYB check for a client? 

When initiating a KYB check to ensure your client is right for you, you need to ensure that they are the right client for your firm. This can be done through introductory calls with clients to understand their scope of work and whether it is a fit for your company. Additionally, it is essential to get an understanding of the company structure. A significant aspect of the KYB process is understanding who will need to be put through the due diligence processes. Therefore, knowing whether they are a Publicly Listed Company (PLC), Limited Liability Partnership (LLP), Limited Liability Company (LLC), Limited Partnership (LP) or even a charity. Determining this will help you understand what type of due diligence and KYB the client must go through.

For example, a PLC will often require less due diligence due to its public profile ad transparency. But, a complicated LLP structure may need deeper KYB processes to understand its credit status and UBO.

And talking about the UBO, you must understand the people you need to know. This can be a complex process. In the UK, legal professionals tend to go to Companies House to understand the individuals involved in the company and manually find the UBO and PWSC. This is a tedious and lengthy process that can get highly confusing. Once the relevant individuals have been identified, firms must have a solid Know your Customer (KYC) and Anti-Money Laundering (AML) process – but that's a discussion for another article.

By utilising systems such as Validient, these issues can be overcome.

Common Issues with KYB Checks for LLPs

  • Getting all of the documents for each individual
  • Complex Structures within companies
  • Things can change, and keeping an eye on changes can be difficult
  • Manual processes are time-consuming
  • International work can mean time differences slows the process down

How Long Can KYB Checks Take?

In theory, KYB checks can be as quick or as slow as both parties make it. For firms, it depends on their efficiencies around the process, the technology they use to help, and the simplicity of the documents they accept. For the client, it can depend on time zones, getting the information from all relevant people, or having a system to improve this.

But on average, it takes two weeks for a commercial client such as an LLP to be onboarded into a law firm where most of this process is the KYB screening.

How can slow onboarding affect your clients?

Interestingly, there are two sides to this story, both with the same figure. For clients, it's shown that 25% of companies have lost a deal thanks to poor law firm onboarding, with 35% of clients feeling frustrated with the number of documents that they need to supply.

Interestingly, one in four law firms has missed out on significant deals due to internally poor boarding processes. And when thinking of the value of an average commercial contract, this loss is staggering.

Having slow KYB processes can not only lose you deals but also put your firm in a bad light. And with word-of-mouth being an essential factor in the industry, ensuring you have the basics covered is critical.

What Legal Tech Solutions Help?

  • Onboarding with Validient – streamline the KYB process and KYC, AML, and PEP checks.
  • Open Banking systems – can speed up the process of checking client accounts and payment methods.
  • Customer Relationships Management (CRM) and Case Management Systems (CMS) to monitor previous due diligence and work with a client.

Conclusion

Know your Business (KYB) checks are essential for all onboarding processes when working with commercial clients. But ensuring that you understand what they are there for and how you can improve yours is a must!

Please contact us to find out how we can help your KYB processes at info@validient.com or book a demo below!

KYC-AML-client-verification-Identity_passport
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