KYB

KYB, or Know Your Business, is the process of verifying that a business is real, lawful and represented by authorized people. It typically includes checking company registration, ownership and sanctions or other financial-crime risks.

KYB is used by banks, payment firms, marketplaces and other regulated or risk-sensitive services before onboarding a corporate customer or allowing it to transact. It is the business equivalent of Know Your Customer, or KYC, which verifies individuals.

A KYB review establishes who the company is, how it is structured and who ultimately owns or controls it. It also helps an organization meet anti-money-laundering, counter-terrorist-financing and sanctions-screening obligations.

What KYB checks typically cover

• Legal name, registered address, incorporation details and company registration number
• Business status, trading activity and, where relevant, licenses or tax identifiers
• Directors, officers and people authorized to open or manage an account
• Beneficial owners, meaning the natural persons who ultimately own or control the business
• Screening of the company and relevant people against sanctions, politically exposed person and adverse-media sources

Why beneficial ownership matters

Shell companies and complex ownership chains can be used to hide the people behind financial crime. KYB therefore often requires firms to identify beneficial owners and trace ownership through parent entities, trusts or other intermediaries until the relevant individuals are found.

KYB in the US and EU

In the United States, financial institutions apply customer due diligence rules under the Bank Secrecy Act, including requirements related to beneficial ownership. In the European Union, KYB-related controls arise principally from anti-money-laundering rules that require obliged entities to identify customers, beneficial owners and transaction risks.

KYB is not a one-time check. Organizations commonly monitor corporate customers for changes such as new owners, altered directors, sanctions listings or other risk signals, with the depth of review based on the customer and product risk.