KYB in Spotlight as Tariffs and Digital Innovation Reshape Procurement

As U.S. tariffs come into full force, global trade routes are being redrawn. So too are B2B procurement strategies.

The reconfiguration of sourcing decisions is happening against a backdrop of ongoing economic uncertainty, fluctuating costs and geopolitical instability. Business identity verification and effective know your business (KYB) controls are emerging as key enablers of smooth digital B2B transactions.

The need for verified, trusted business identities is pressing as businesses reassess their supply chains and procurement strategies and eye digital marketplaces and eProcurement platforms to mitigate risk and optimize supplier relationships.

The ability to confirm a supplier’s legitimacy in real time is critical for reducing fraud, ensuring compliance, and fostering stronger, more transparent partnerships. Without it, businesses expose themselves to risks that could lead to supply chain disruptions, financial losses and reputational damage.

Read also: AI for KYB Onboarding Helps B2B Partnerships Scale Securely

The movement toward digital procurement was underway before the latest round of tariffs, but the shift has gained new urgency as companies seek more resilient and cost-effective supply chain solutions.

Digital procurement platforms offer advantages such as automated supplier matching, AI-driven price optimization and real-time contract management.

However, as transactions increasingly take place in online marketplaces rather than through established, relationship-driven networks, the risks of fraud, misrepresentation and unreliable suppliers have grown. Fraudsters can exploit the anonymity of digital platforms, posing as legitimate businesses to siphon payments or deliver substandard goods.

“Fraud is growing as fast, or faster, than the pace that the overall B2B market is growing…,” Eric Frankovic, general manager of business payments at WEX, told PYMNTS in September.

This is where verified business identity steps in as a safeguard, ensuring that companies engaging in digital procurement are dealing with legitimate, trustworthy partners.

“The digital front doors of most businesses are not very secure,” Prove Identity CEO Rodger Desai told PYMNTS last spring. The solution is that “these things have to be signed — because by signing it, you can authenticate the vendor or counterparty and make sure it’s someone you trust.”

In traditional procurement, trust is often established through in-person relationships, long-term partnerships and extensive due diligence. Digital procurement, however, requires new mechanisms to replace these trust-building measures.

A robust identity verification process ensures that a business entity is registered, financially stable and operationally legitimate. This can include verification of tax identification numbers, corporate registration records, financial health indicators and beneficial ownership structures.

See also: Healthcare Procurement Has a Growing Hacking Problem

Technology is making business identity verification more robust and seamless. For example, artificial intelligence-powered algorithms analyze transaction patterns and flag suspicious activities in real time, helping businesses identify fraudulent entities before engagement.

Featurespace founder David Excell and Gasan Awad, senior vice president of enterprise fraud product management at PNC, told PYMNTS in an interview published this week that successful defenses depend on pattern recognition. The right data, rendered in real time and scrutinized with behavioral analytics, can pull a payment right when the request is being made, protecting all stakeholders.

Marketplaces that prioritize business identity verification can offer enhanced protections such as escrow services, transaction monitoring and AI-driven risk assessments. These measures not only protect buyers from fraud but also create a competitive advantage for verified sellers who can demonstrate their credibility to prospective partners.

It isn’t just the titans of B2B marketplace trade like Amazon Business that companies are turning to.

If fashion brands “feel they need a more secure place to place their goods, where they’re going to get paid in a timely fashion, the independent retailer channel is growing and opening up,” Kristin Savilia, CEO of B2B fashion Marketplace JOOR, told PYMNTS in an interview published this week.

At the same time, now that the Treasury Department will not enforce the Corporate Transparency Act’s penalties and fines associated with the beneficial ownership information reporting rule, the onus is on businesses themselves to play it safe.

As of Dec. 1, about 30% of small businesses had filed beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). At the time, about 32.6 million businesses were required to submit an initial beneficial ownership information report by Jan. 1.

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