Verification Vs Validation: What Fintechs Miss About KYB in MEA

Back in 2022, Wise, a prominent fintech player in the cross-border payment sector, was fined $360,000 by Abu Dhabi’s financial regulator for breaching anti-money laundering (AML) standards.  
 
The fine resulted from a flawed KYB approach that favoured basic identity checks over thorough validation of high-risk customer funds. It also failed to consider customer nationality as part of the risk assessment. 
 
This incident highlights the costly consequences that can befall a fintech when basic verification takes precedence over comprehensive validation, highlighting the urgent need for a validation-centric KYB approach. 

This article dives into:  

• Why MEA Fintechs need to rethink verification vs validation  
• Verification and Validation in Action: MEA Country Examples  
• How real-time data accelerates KYB without sacrificing compliance   
• How Cedar Rose facilitates instant verification and validation in MEA 

Why MEA Fintechs Need to Rethink Verification vs. Validation  

MEA Fintechs must rethink their Know Your Business (KYB) approach by clearly distinguishing, and strategically balancing verification and validation. Verification happens early in the onboarding process. It confirms a business’s identity by checking whether submitted documents are accurate and match official records. This includes reviewing registration details, licenses, and verifying the identities of directors or Ultimate Beneficial Owners (UBOs). It answers the question: “Is this who they say they are?” 

Validation goes further. It assesses whether the business is legitimate, trustworthy, and operating within legal and ethical boundaries. This involves screening for sanctions, politically exposed persons (PEPs), adverse media, and complex ownership structures. Unlike verification, validation is not a one-time event. It supports ongoing risk monitoring and helps answer: “Is this business genuine, and are there any risks in continuing to work with them?”  In essence, validation confirms the “what” while validation assesses the “why” and associated risks.  Together, these two steps form the foundation of a risk-aware, compliant KYB strategy.  

This distinction is critical in the MEA region due to fragmented regulations, limited data, and uneven digitisation. Business registries are often incomplete, siloed, and difficult to access, frequently lacking standard formats or multilingual support. Complex ownership structures, including family conglomerates, offshore entities, and nominee shareholders make it challenging to identify Ultimate Beneficial Owners (UBOs). Many informal businesses also lack proper documentation, further complicating due diligence. 

The region’s linguistic diversity, cultural nuances, and prevalence of common business names increase the risk of identity mismatches. Geopolitical factors, varying levels of sanctions exposure, and evolving AML/CFT regulations add further complexity. Moreover, the relationship-based nature of business in many Middle Eastern markets isn’t always reflected in formal KYB processes.  

Thus, a checklist mentality is no longer enough.  

MEA Fintechs need a validation-led, locally informed, and risk-based KYB strategy to move forward. This approach must go beyond basic verification to enable better compliance, risk management, and decision-making. This means tailoring verification and validation to customers' risk profiles, conducting basic checks for low-risk businesses and enhanced due diligence for higher-risk ones. A flexible, risk-aware KYB strategy is essential for compliance, fraud detection, efficient onboarding, and resource allocation across the MEA market. 

Verification and Validation in Action: MEA Country Examples  
 

How Real-Time Data Accelerates KYB without Sacrificing Compliance    

Bringing this strategy to life requires more than policy, it demands tools that can adapt to varying risk levels. That’s where real-time data steps in.  
 
Whilst traditional Know Your Business (KYB) often relies on static, customer-submitted documents that lead to delays and outdated risk assessments, real-time data offers a smarter faster alternative. It enables fintechs to access accurate, up-to-date information instantly, dynamically tailor risk assessments, and maintain continuous compliance without slowing down onboarding or increasing operational workloads. It also improves verification and validation, accelerating KYB decisions and ensuring they are reliable, accurate and risk informed.  
 
In short, real-time data:  

1. Accelerates Verification and Strengthens Accuracy 
It accelerates verification by instantly confirming business identity, registration, and legal documents via official sources. It automates UBO verification, regardless of complexity, and enables immediate screening for sanctions, PEPs, and adverse media, improving early AML. This reduces reliance on customer documents, speeding up onboarding with fewer errors, and automating manual handling for greater efficiency, especially with large KYB volumes.  

2. Facilitates Dynamic Validation 
It enables continuous risk scoring, and dynamic monitoring of businesses’ risk profiles.  
This lets fintechs track business’s risk factors like sanctions, adverse media and flagged connections. It also allows them to receive instant alerts in case enhanced due diligence is required. These real-time insights support faster, more accurate decisions, reducing the likelihood of dealing with high-risk or non-compliant businesses and ensuring ongoing business safety. 
 

Real-time data provides the most current, reliable basis for both verification and validation, removing the delays and risks of using static or outdated customer information. Automated screening of sources like international watchlists and business registries also helps fintechs avoid onboarding prohibited entities and meet jurisdiction-specific KYB requirements. This accurate, timely approach enables more precise compliance decisions, aligned with MEA standards for UBO thresholds, AML/CFT laws, and PEP screening. 

It automates KYB, significantly reducing manual work and costs for compliance teams. This allows them to focus on complex, high-risk investigations. Streamlining verification (ID checks) and validation (risk evaluation) enhances internal efficiency without sacrificing control. It also simplifies onboarding for customers and staff, leading to quicker revenue generation. 
 

It supports AML/CFT compliance in countries such as the UAE, Saudi Arabia, Nigeria, and Kenya. It also enables fintechs to carry out jurisdiction-specific UBO verification, sanctions screening, and due diligence with greater precision. As regulations evolve, real-time capabilities ensure continuous compliance while scaling to support fintech growth across the MEA region. 

How Cedar Rose Facilitates Instant Verification and Validation in MEA 

Cedar Rose empowers MEA fintechs to take full control of verification and validation, combining speed, precision, and deep regional expertise. 

Our CRiS Intelligence platform offers real-time access to a meticulously maintained database of millions of MEA company records, including registration data, ownership structures, and key personnel. This enables fintechs to verify business identities quickly and reliably, reducing onboarding delays and eliminating reliance on fragmented or outdated sources. With trusted, independent data at their fingertips, fintechs can establish a strong KYB foundation from the outset. 

For validation, Cedar Rose provides advanced risk scoring, credit analysis, enhanced due diligence (EDD), and UBO identification, even within opaque or layered ownership networks. Real-time monitoring of sanctions, PEPs, and adverse media supports proactive risk detection, while Arabic language support and more than two decades of MEA experience ensure alignment with complex local regulations. 

Strengthen your KYB strategy with a partner built for the region. 
Schedule a walkthrough with our MEA experts. 

Sources  

1. https://me-insights.bakermckenzie.com/2024/01/18/uae-changes-to-the-ultimate-beneficial-ownership-regulations-to-address-the-complex-structures-and-needs-of-businesses/  
2. https://ripjar.com/blog/aml-anti-money-laundering-regulations/  
3. https://thekyb.com/blog/mapping-risks-and-challenges-of-kyb-in-the-mena-region/  
4. https://complyadvantage.com/insights/kyb-vs-kyc-difference/  
5. https://complyadvantage.com/insights/kyb-automation/  
6. https://resources.fenergo.com/blogs/ai-in-finance 
7. https://www.sanctionscanner.com/blog/how-to-check-the-legitimacy-of-a-company-999  

Table Sources  

1. https://www.getfocal.ai/blog/identity-verification-in-the-uae  
2. https://www.amf.org.ae/sites/default/files/publications/2022-07/Digital%20ID-eKYC-Remote%20Onboarding-Arab%20Countries-Apr-22.pdf  
3. https://oecd-opsi.org/wp-content/uploads/2024/01/Nafath-App-1-2024-1.pdf  
4. https://accurascan.com/kyc/egypt/  
5. https://usesmileid.com/blog/phone-number-verification-in-kenya  
6. https://docs.signzy.com/us-apis/nigeria-bvn-verification