When it comes to verifying a business, not all data is created equal.
For years, compliance and risk teams have relied on “authoritative” data sources like Secretary of State (SOS) registries, IRS-issued EINs, and professional licensing databases to confirm that a business exists and is in good standing. These records carry legal weight and form the backbone of regulatory compliance and Know Your Business (KYB) workflows.
But not all vendors provide authoritative data that’s fresh, complete, or consistent, making it difficult for teams to act confidently without additional verification. That’s why leading organizations invest in high-quality authoritative data from trusted sources — and increasingly pair it with alternative signals to build a more complete picture of business legitimacy and risk.
The most effective KYB strategies today aren’t about choosing one type of data over the other. They’re about combining authoritative foundations with alternative context to onboard faster, reduce fraud, and make smarter decisions.
What is authoritative data?
Authoritative data refers to government-issued or regulatory information that confirms a business's formal registration. Examples include:
- Secretary of State filings
- Employer Identification Numbers (EINs)
- Business licenses
- Tax status verifications
- UBO (ultimate beneficial ownership) declarations, where required
This data is essential. It validates a business’s legal existence and is often required for compliance with AML and KYC regulations. But depending on the provider, there can be friction:
- Update delays across jurisdictions. Not all states update their registries on the same cadence.
- Data quality gaps. Some vendors offer inconsistent formats or stale records.
- Minimal context. These sources don’t always reflect whether a business is active, dormant, or potentially compromised.
- Entity type gaps. Some business types, like sole proprietors, may not appear in SOS records at all, creating blind spots in verification if authoritative data is used alone.
That’s why high-quality, up-to-date authoritative data is a must—and why many risk teams go a step further, layering in other data types to fill in the picture.
What is alternative data?
Alternative data includes information gathered outside of traditional regulatory systems that helps signal business identity, intent, or activity. Examples include:
- Website presence and metadata
- Social media and directory listings
- Business email or phone number consistency
- IP address behavior
- Online reviews or press mentions
This type of data provides real-time insight into whether a business is operational, recently stood up, or exhibiting suspicious behavior. It’s especially valuable when verifying sole proprietors or newly formed entities that may not have an extensive public record.
Financial institutions are increasingly incorporating alternative data into their onboarding and underwriting processes to enhance decision-making and risk assessment.
Of course, it comes with tradeoffs:
- Less standardized. Signal strength can vary across sources.
- Easy to manipulate in isolation. A sleek website doesn’t guarantee legitimacy.
- Not sufficient on its own. Alternative signals alone may not satisfy compliance requirements.
But when paired with authoritative data, these signals can help reduce manual reviews, spot fraud early, and accelerate onboarding.
Want to see alternative data in action?
Explore how web signals like domains, metadata, and online presence can strengthen business verification. More here.
Blended data is the future of KYB
To manage onboarding and monitoring at scale, smart companies are embracing hybrid KYB strategies. For example:
- Using SOS and EIN data to verify legal existence and match against government watchlists
- Layering in phone/email consistency and web presence to validate operational legitimacy
- Monitoring alternative data over time to detect sudden changes in behavior that could indicate fraud
In a world where business fraud is becoming more sophisticated, rigid rules aren’t enough. Data diversity is a strength.
One way to frame this is through the Middesk Triangle of Verification — a three-pronged approach to building trust:
The strongest KYB signals appear when:
- A business’s submitted information (such as during onboarding)
- Matches authoritative sources (like SOS and EIN records)
- And aligns with its online presence (website, contact info, IP reputation, etc.)
When all three sides of this triangle tell the same story, trust increases. If they diverge, it’s a strong indicator that deeper verification — or further review — is needed.
The bottom line
Authoritative data builds the foundation of trust. Alternative data fills in the gaps.
Together, they give compliance and risk teams the tools they need to verify faster, onboard safer, and stay ahead of emerging threats.
Because the real question in KYB isn’t just "Is this business registered?" It’s "Can I trust them?"
See blended data in action
Blending authoritative and alternative data helps teams spot fraud faster and streamline KYB. Explore how Middesk helps compliance and risk teams verify with confidence.
