KYB (Know Your Business) Verification Guide 2026

Knowing your customers is essential not only for mitigating fraud risk, but also for satisfying the mandatory customer due diligence and verification requirements imposed on obliged entities under AML/CFT legislation.

Getting this wrong can be very costly. Fraud is predicted to cost financial institutions $58.3 billion globally by 2030, more than doubling current expected worldwide fraud losses of $23 billion in 2025. Regulators can also impose substantial fines on obliged entities that fail to conduct proper due diligence on their business customers.

KYB, meaning ‘Know Your Business,’ is the process of verifying the identity, ownership, and control structure, as well as activities of a business with which you are working. It helps to identify fraudulent businesses, as well as those who present a higher risk of financial crime based on factors such as their location and any history of wrongdoing.

Increasingly, AI-powered automation is at the heart of KYB, helping organizations keep ahead of fraudsters’ rapidly evolving tactics.

KYB measures are typically required by AML regulations as part of Customer Due Diligence (CDD), and most jurisdictions have pretty much the same requirements. Getting them done properly—and in full compliance with all applicable laws—can put considerable strain on a business’s resources. This is another reason why automation is now crucial to KYB compliance.

Let’s dive deep into KYB, how it differs from KYC, and how we verify businesses at Sumsub.

What is KYB (Know Your Business) verification?

Know Your Business (KYB) verification is a regulatory due diligence procedure designed to confirm a business's legal status, understand its operational activities, and assess its exposure to money laundering and related financial crime risks. It is very similar to the Know Your Customer (KYC) process, which is used to verify identities and determine risk levels for individual customers. 

KYB looks at the structure, ownership (including the Ultimate Beneficial Owner or UBO), economic profile, or group structure (if applicable) of a business. It also involves procedures for establishing the purpose of a business relationship and the activities of the business in question.

This process enables companies to determine the authenticity of the entities they are dealing with to ensure they are not being used to conceal the identities of owners for illegitimate purposes. KYB also includes assessing the purpose of business relationships and the nature of their operations to ensure they aren’t being used to conceal illicit activities such as money laundering or fraud.

Know Your Business verification measures are key components of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations. They are also legally required by the Financial Action Task Force (FATF), regional regulations such as the 5th and 6th EU AML directives, and various national AML laws.

Beyond compliance, KYB helps businesses reduce fraud risks, prevent financial crimes, and ensure trustworthy partnerships. Today, many companies integrate AI-powered and automated KYB solutions to improve the verification process, increase efficiency, and reduce the risk of onboarding high-risk entities.

Why is KYB important for compliance and risk management?

The main reasons for implementing KYB services are regulatory compliance and fraud prevention. KYB also helps to protect a business’s reputation, which can be seriously harmed if financial crime is allowed to take place due to failures in Customer Due Diligence processes such as KYB.

Because KYB is critical for fraud prevention, Anti-Money Laundering (AML), and Countering the Financing of Terrorism (CFT), it is a regulatory requirement in most countries. It allows businesses to verify who potential corporate customers are, who has a financial interest in their business, and assess their level of risk for financial crime based on various factors.

KYB helps obliged entities to fulfil AML/CFT requirements and understand whether their partners, corporate customers, or suppliers are:

• Presenting money laundering and terrorist financing risks
• Involved in financial crime or other illicit activity
• Subject to sanctions or other adverse regulatory action, or adverse and negative publicity
• Suspended from activity or fined for violating regulations

Multiple money laundering and terrorist financing watchdogs, including the UK’s Financial Conduct Authority (FCA), the European Banking Authority, and FATF, require identifying and verifying companies and UBOs in their guidelines.

KYB enables companies to assist law enforcement by reporting suspicious activity and providing available information on customers or activities being investigated.

To bring these benefits to life, take the example of Transferra, a global payment platform. By implementing Sumsub’s KYB solution, Transferra reduced business verification time by over 50%, improved its onboarding process, and maintained full compliance across jurisdictions, showing how effective KYB directly supports business efficiency and growth.

Suggested read: Complete Guide to Suspicious Activity Reports

Inadequate KYB may be an AML warning sign. Therefore, when a company begins working with a corporate customer before carrying out necessary due diligence procedures, it exposes itself to money laundering or terrorist financing risks.

Fraud prevention and KYB

KYB helps companies detect and eliminate fraudsters among their counterparties. This helps reduce the financial, operational, and reputational risks of money laundering, terrorist financing, and fraud.

Fraud can easily make its way into the business sphere. For instance, a newly registered company submitted a forged business license and an altered UBO list to appear compliant and hide its true ownership structure. Without proper KYB checks, the firm would have been onboarded as a legitimate customer, enabling the concealed owners to move illicit funds through corporate accounts.

That’s why it’s important to notice red flags ahead of time. These include, but are not limited to:

• The company’s office address and shipping address do not match
• There is no significant credit record for the company
• The company’s official documents include mistakes or edits
• The company’s ownership is changing frequently

KYB vs KYC: The key differences

KYB and KYC (Know Your Customer) are broadly similar processes, with KYB being for businesses and KYC being for individuals. Which businesses need to carry out KYB and/or KYC checks will depend on various factors, including whether they are regulated or unregulated and the sector they operate in.

Here is a side-by-side comparison of the two processes:

Category	KYC (Know Your Customer)	KYB (Know Your Business)
Focus	Verifies the identity of individual customers to prevent fraud, money laundering, and financial crimes.	Verifies the identity and legitimacy of businesses to prevent corporate fraud and illegal activities.
Checks	Personal information: name, date of birth, address, and ID documents (passport, driver’s license, etc.). and Additional checks: financial history, transaction monitoring, and risk assessment.	Business entity details: company name, registration number, incorporation date, ownership structure, key management personnel, corporate documents, and Verification of business licenses, tax IDs, corporate filings, and financial statements (if required).
Industries	Used in both regulated and unregulated industries. / Mandatory for AML-obligated entities such as banks, neobanks, crypto firms, law firms, real estate, carsharing, and businesses handling financial transactions. / Optional for fraud prevention in unregulated industries.	Used by financial institutions, payment processors, marketplaces, and e-commerce platforms to verify the legitimacy of business partners.

KYB compliance requirements: What you need to know

When establishing a business relationship with a corporate customer, regulated companies must conduct CDD (customer due diligence) procedures in accordance with AML regulations.

What KYB checks include

Standard KYB checks will look at things such as:

• Business registration. Confirming the company's legal name, registration number, and legal status.
• Business addresses. Verifying the business's registered address and any other relevant addresses (e.g., for branch offices).
• Ultimate Beneficial Owners (UBOs). Identifying and verifying who ultimately benefits from and controls the company; checking directors and representatives.
• AML screening. Checking the business, its directors, and UBOs against trusted watchlists for sanctions, adverse media, Politically Exposed Persons (PEP), global watchlists, and other risk factors for financial crime. 
• Licensing and permits. Establishing that a business has any required licenses and permits to operate legally.
• Financial health. Evaluating the company's financial health and any impact this has on its risk profile.
• Ongoing monitoring. The business should be continuously monitored for any changes that could increase its risk level.
• Source of funds (optional, as part of EDD). Affirming that the business’s finances are legitimate and do not show any signs of funding from criminal activity.

KYB process explained

Usually, KYB involves the following steps:

✅Collecting information that identifies the company

The information needed includes:

• Name, registered number, registered office, incorporation date, legal status, and principal place of business (optional)
• Ownership and control structures
• The law to which it is subject
• Information on the purpose and intended nature of the business relationship
• Any license from a regulatory body authorizing the entity to conduct certain activities

✅Collecting company documents

The collected documents are:

• Articles of association or other governing documents 
• Proof of legal existence (certificate of incorporation)
• Documents disclosing beneficial ownership structure (Shareholder registry )
• Documents disclosing the control structure (Director registry or Power of Attorney in case of authorized representatives)
• Extract from a state registry or a certificate of good standing 
• Proof of registered address.
• Audited financial statements if necessary, i.e., if enhanced due diligence is needed

Businesses must also ensure that KYB processes comply with data privacy standards, such as the General Data Protection Regulation (GDPR) and the US Data Privacy Framework, especially when handling sensitive corporate and personal information. 

✅Verifying the identities of Ultimate Beneficial Owners (UBOs)

UBOs are those who directly or indirectly own more than 25% (in some jurisdictions, 10-20%) of the company or otherwise exercise significant control over it. The following documents need to be provided for verification of such individuals:

• Proof of identity, i.e., national identity card or passport
• Proof of address, i.e,. utility bill or bank statement, not older than three months
• Proof of ownership, i.e., shareholder or UBO registry, Declaration of trust, etc. 

For companies operating in or associated with high-risk jurisdictions identified by FATF, Enhanced Due Diligence (EDD) is mandatory. It requires a deeper analysis of ownership structures and business relationships, along with continuous monitoring of their activities.

✅Understanding the nature and purpose of the proposed business relationship

This is to assess whether the intended relationship is in line with the company’s expectations and has a meaningful basis for ongoing monitoring.

✅Applying the risk-based approach to determine high-risk corporate customers

This allows companies to adopt a more flexible set of measures based on their available resources, needs, and industry risks for a more effective approach.

Using AI and machine learning for KYB risk assessment is becoming increasingly common. It helps businesses automate risk scoring, detect anomalies, and refine their risk-based approach for more accurate decision-making.

As part of a risk-based approach, geographical factors should also be taken into account:

• Local regulations: This involves checking the company’s compliance with local regulations and requirements specific to the jurisdiction where the business is registered and operates.
• Cross-border operations: For businesses operating in multiple jurisdictions, it means ensuring compliance with the regulations of all relevant countries.

Industry-specific requirements as part of the risk-based approach:

• Regulatory filings: Depending on the industry, there may be additional regulatory filings or KYB compliance requirements (e.g., financial services, healthcare, real estate).
• Professional licenses: For businesses in certain professions, it means verifying the credentials and licenses of key personnel may be necessary.

✅Performing anti-money laundering (AML) screening to identify high-risk conditions when dealing with corporate customers

This involves screening companies and their beneficiaries, directors, and representatives against sanctions lists, global watchlists, PEP lists, adverse media, and other similar sources.

According to FATF’s February 2025 updates, financial institutions need to ensure payment transparency by implementing strict controls to prevent misuse of payment systems for illicit financial activities.

✅Performing ongoing monitoring of business relationships with corporate customers

This involves checking if the company structure has changed, whether officials have been added to a PEP list, or if its jurisdiction has appeared under sanctions. To track all these changes over the course of a business relationship, the ongoing monitoring process should include:

• Scrutiny of transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds). This is to ensure that the transactions are consistent with the company’s knowledge of the corporate customer, their business, and risk profile
• Ensuring that the documents or information obtained for CDD purposes are kept up to date.

The above measures enable companies to better understand their customers, assess risks, and ensure that partners are not involved in money laundering, terrorist financing, or other financial crimes.

Also, to meet evolving regulatory requirements, businesses should implement periodic reviews that reassess entity information and risk profiles at defined intervals or triggered by risk events, which helps stay compliant throughout the customer lifecycle.

✅Record-keeping

Businesses must keep copies of documents obtained through conducting due diligence on both individuals and companies. Regulatory bodies require businesses to retain all documentation for at least five years after the end of a customer relationship or the completion of a transaction. In some high-risk cases, an extended retention period may be required. These records should contain the following:

• Customer information
• Transactions
• Internal and external suspicion reports
• Money Laundering Reporting Officer (MLRO) annual (and other) reports
• Training and compliance monitoring
• Information about the effectiveness of training

Who needs KYB?

The list may differ from jurisdiction to jurisdiction. As an example, according to the EU's AML/CFT regulations (which include the 6th AML Directive, or 6AMLD), KYB is required for the following AML-regulated entities:

• Financial institutions
• Credit institutions
• Online payment services
• Online banking
• Crypto-Asset Service Providers
• Services auditors
• External accountants and tax advisors
• Lawyers, notaries, and other independent legal professionals 
• Trusts
• Estate agents
• Gambling services
• High-value goods and luxury retailers
• Trust & company service providers (TCSPs)

However, some corporate customers are not required to identify beneficial owners. Such companies include:

• Those listed on a regulated market in the European Economic Area (EEA), or on a non-EEA market that is subject to specified disclosure obligations;
• Majority-owned and consolidated subsidiaries of such companies, listed above.
• KYB verification is also beneficial for non-regulated industries such as e-commerce platforms and carsharing services. Such verification helps expose shell suppliers and the individuals behind them.

KYC & KYB regulations: Global standards and updates (2026)

KYC

KYC is adopted by both regulated and unregulated entities to make sure that clients are who they say they are and prevent fraud. The processes are also governed by Anti-Money Laundering (AML) laws, like the USA PATRIOT Act and the European Union’s Anti-Money Laundering Directives, which means that regulated entities are obliged to adopt KYC.

As of February 2025, the FATF updated its standards to better support financial inclusion. These changes affect Recommendation 1 and its Interpretive Note, with corresponding amendments to Recommendations 10 and 15. The revisions balance the need for thorough Customer Due Diligence with the goal of promoting access to financial services for underserved populations.

KYB

KYB requirements are also driven by AML regulations, but they are more focused on corporate entities. Regulations also vary widely depending on the jurisdiction and the type of business.

In March 2023, the Financial Action Task Force (FATF) updated its guidelines on beneficial ownership. The revision emphasizes the need for countries to implement a “multi-faceted strategy” in this area. It is crucial for relevant authorities to have access to accurate, current, and comprehensive information about the beneficial ownership of legal entities. Furthermore, these authorities must ensure that both primary and beneficial ownership details are promptly updated.

Also, the Corporate Transparency Act in the US required reporting companies existing before 2024 to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.

Jurisdiction	KYB Requirement Summary
EU (5th & 6th AML Directives)	Mandatory verification of legal entities, UBO identification, and risk-based ongoing monitoring.
FATF Recommendations	KYB and EDD for higher-risk entities; ongoing monitoring required.
US	Corporate client verification, including UBO checks under FinCEN’s CDD Rule; periodic reviews encouraged.
UK	KYB under Money Laundering Regulations 2017 (updated); includes verification of directors, UBOs, and ongoing screening.
APAC (e.g., Singapore, Hong Kong)	Strong AML/CFT frameworks; KYB obligations include verification of company structure and UBOs. Singapore’s MAS and Hong Kong’s AMLO require enhanced due diligence for high-risk entities.
LATAM (e.g., Brazil, Mexico, Colombia)	Varies by country; Brazil’s Central Bank and Mexico’s CNBV require KYB for financial institutions and fintechs, including documentation on legal representatives and beneficial owners. Regional trend toward FATF-aligned risk-based approaches.

KYB services and automation

Most KYB service providers now rely heavily on AI-driven automation to make sure they can deliver an efficient, cost-effective KYB solution that ensures regulatory compliance across various jurisdictions. AI-powered KYB tools, such as Sumsub’s, offer automated workflows to ensure the entire process can be completed consistently and in line with all requirements.

KYB tools should offer API integration, so they can communicate with your existing systems, forming a seamless part of your CDD framework. They can automate labor-intensive and time-consuming processes, such as registry screening and UBO verification, slashing onboarding times and cutting costs while actually increasing effectiveness.

KYB compliance automation also offers benefits such as dynamic risk scoring. This means that a customer’s risk score can be promptly updated if and when any new information comes to light that changes their risk profile. AI-powered tools can also be continuously updated to meet the latest regulatory requirements, meaning there is no gap in compliance when new rules come into effect.

KYB in crypto and digital assets

KYB is just as important for crypto companies and Virtual Asset Service Providers (VASPs) as it is for more traditional businesses. The FATF Guidance for Virtual Assets and VASPs makes clear that crypto companies and VASPs must comply with the same requirements as financial institutions. This includes Customer Due Diligence, within which KYB sits.

Various jurisdictions have begun to regulate specifically for crypto-assets with legislation such as the EU’s Markets in Crypto-Assets Regulation (MiCA). MiCA came fully into force on 30 December 2024 and creates a regulatory framework for crypto assets in the EU. MiCA designates Crypto-Asset Service Providers (CASPs) as obliged entities under the existing EU AML framework, with CASP being the EU’s terminology for entities that are known as VASPs elsewhere in the world (although with some differences in how they are defined).

KYB for crypto companies and VASPs is, therefore, something these types of businesses really should be on top of. Even if it is not currently a regulatory requirement in your jurisdiction, it is likely to become so in the near future.

Common KYB challenges and solutions (2026)

Some of the most common challenges facing businesses carrying out KYB include:

• Data inconsistency. Where company data is incomplete, outdated, inconsistent between different sources, or otherwise unreliable, this can hamper verification. KYB solutions must have access to trusted sources of data so that the correct information can be sourced.
• Limited registries. Official registries should hold key information about a business, but this information is not always complete or readily accessible. KYB relies on having access to this information, so it is important to choose KYB tools that can access the required data and proactively highlight any gaps.
• Complex ownership structures. It can be more difficult to trace the Ultimate Beneficial Owners (UBOs) of companies with complicated structures, such as those that are multi-layered or include subsidiaries or offshore entities. Untangling these complex structures requires a high level of expertise plus access to worldwide data, which is why many businesses choose to work with an outsourced KYB partner.
• Different regulatory requirements across jurisdictions. Obliged entities will need to comply with the regulatory framework of every country and region within which they operate. This often means meeting different requirements in different parts of a business, which can complicate a company’s overall compliance framework. Flexible KYB systems that can adapt to different regulatory requirements are key here, offering coverage for all of the jurisdictions in which a business operates.
• Onboarding bottlenecks due to a lack of resources. KYB checks can significantly slow down the onboarding process, especially where there is heavy reliance on manual checks. Automated KYB is now the gold standard as it can complete the process in seconds, avoiding bottlenecks.
• Lengthy and complicated KYB processes. These drive customers away, causing drop-offs during onboarding and slowing revenue growth as clients choose faster, more streamlined competitors.
• High rates of false positives. Where KYB protocols are inflexible, they can lead to a high rate of false positives by applying overly stringent standards to low-risk customers. Dynamic KYB tools powered by AI can solve this problem by allowing the process to adapt monitoring rules to a customer’s risk profile, achieving higher pass rates while still ensuring comprehensive due diligence is carried out when needed.
• Increasingly sophisticated tactics from criminals. Criminals are constantly adapting in an attempt to get around AML, CTF, and anti-fraud protocols. Many are now using advanced AI tools to try to fool the checks used by regulated businesses, including creating synthetic identities and documents. Businesses must now use AI tools themselves in order to keep up and stay ahead.

Suggested read: Hot New Fraud Trends in 2025: AI Scams, Pig Butchering, and Mobile Payment Attacks

How to choose a KYB provider

Choosing the right KYB provider is key to balancing regulatory compliance with business efficiency. The solution you choose should offer global coverage, flexible workflows, UBO verification, support for ongoing monitoring, and the ability to automate periodic reviews—all while keeping onboarding fast and secure.

Sumsub provides an end-to-end platform for business verification that’s fast, automated, and globally compliant. This KYB solution combines document checks, registry extracts, and sanctions screening to deliver verified business profiles in just a few clicks, helping you stay compliant without the paperwork hassle.

Sumsub offers six unique modules that can be combined via the Workflow Builder, making Sumsub the only 6-in-1 solution on the market:

1. Corporate registry check
2. Ownership and control check
3. UBO verification
4. AML screening
5. Questionnaires 
6. Corporate documents review

The client can choose how many modules they need and combine them as they like.

With the KYB solution, you can:

• Automatically collect and verify company documents and UBO data
• Cross-check information via global and local registries
• Screen companies and stakeholders against sanctions, watchlists, PEPs, and adverse media
• Customize your KYB workflow to meet local and international regulatory requirements
• Monitor businesses and their stakeholders on an ongoing basis

The flexible integration options allow you to set up KYB in your dashboard, via API, or with ready-made no-code solutions—so you can launch faster and focus on growth.

Periodic reviews

You can also stay compliant through ongoing due diligence by enabling periodic reviews of business entities. It helps customer information stay accurate and compliant over time by allowing businesses to automatically reassess customer information, risk levels, and ownership structures at defined intervals or when risk triggers are met.

They work by re-running selected checks such as document verification, registry lookups, and sanctions screening, based on predefined schedules or events. While many companies still rely on manual checks, automated periodic reviews significantly reduce operational workload, improve accuracy, and help identify changes in business risk that may otherwise go unnoticed. 

It can be set up in a few different ways: periodic checks on a fixed schedule, periodic checks by document expiration date, and event-based rechecks.

Key technology to automate the KYB process: ACDR (Automated Company Document Reading)

ACDR is an AI-powered feature that extracts all necessary information from corporate documents in any script using advanced OCR technology that covers 140+ languages. The extracted data is cross-checked within seconds against corporate registries to ensure it is accurate and authentic.

Why use ACDR?

• Speed up onboarding by eliminating repetitive manual checks
• Increase precision with AI-powered data extraction and validation
• Improve user experience with instant feedback on uploaded documents
• Minimize compliance risks through reliable cross-referencing with official sources

Available upon request in your dashboard, ACDR helps you handle corporate documents like a pro—streamlining KYB while keeping your compliance airtight.

Expert insight: Streamlining KYB with automation

Regulated fintech group DitoBanx came to Sumsub searching for a way to simplify their compliance framework, speed up user verification, and support rapid scaling while complying with all regulatory requirements across their various markets.

DinoBanx works to accelerate digital asset adoption across Latin America and beyond. They offer retail services, a licensed platform for tokenization, and white label infrastructure for financial institutions. With over 100,000 registered users, they are growing fast but have faced challenges, including being able to scale rapidly while maintaining compliance with the various regulatory frameworks across Latin America and the US.

Sumsub worked with DitoBanx to cover all of their core compliance needs in one platform, including provision for KYB, KYC, and ongoing transaction monitoring. As a result, they saw customer verification times plummet from around 24 hours to just 17 seconds, a 30% increase in pass rates, and a 40% reduction in fraud and false positives. As a bonus, they also cut compliance operating costs by 25-30% while increasing user acquisitions and transaction volumes.

Key takeaways: Building KYB compliance in 2025

When reviewing your KYB compliance protocols, ask yourself if you have:

• Collected all necessary information about the company, such as their company name, registered number, registered address, identities of key people and Ultimate Beneficial Owners (UBOs), business structure, licenses, and permits.
• Collected key company documents like their articles of association, shareholders’ agreements, certificate of incorporation, proofs of addresses, etc.
• Verified the authenticity of the company information and documents, including the identities of the UBOs, directors, and representatives.
• Assessed the nature and purpose of the business relationship to establish that it is legitimate and in line with expectations.
• Checked the company’s compliance with all relevant regulations covering any requirements specific to the jurisdiction/s in which they are registered and operate.
• Taken a risk-based approach by assessing the customer’s level of risk for financial crime, then applying the right level of due diligence for their risk profile.
• Accounted for any industry-specific requirements where the customer’s sector imposes additional regulatory obligations.
• Carried out comprehensive AML screening by checking the customer and its beneficiaries against trusted watchlists, including for sanctions, Politically Exposed Persons (PEP), and adverse media.
• Set up ongoing monitoring to continuously check for any changes to the company or factors affecting its risk profile.
• Record keeping of all checks carried out and their results, as well as providing for all future information related to the customer to be stored in an easily accessible way.

Please also remember that to ensure you meet these requirements consistently in a way that is fast, accurate, and cost-effective, automation really is essential.

KYB in 6 easy steps: A quick summary

Sumsub’s KYB solution verifies businesses in a streamlined, automated process:

1. Company information collection

Gathering key corporate details, including the company name, registration number, country of incorporation, and corporate documents. Collecting information on shareholders, UBOs, and directors as needed.

2. Automated document verification

Verifying submitted corporate documents’ authenticity, consistency, and validity using AI-powered technology.

3. Data extraction and registry cross-check

Extracting key data points from documents and automatically cross-checking them against official corporate registries and reliable third-party databases.

4. Stakeholder verification

Identifying and verifying Ultimate Beneficial Owners (UBOs), shareholders, and directors. Performing KYC checks, liveness detection, and verifying identities against documents.

5. Sanctions, PEP, and adverse media screening

Screening businesses and related individuals against global sanctions lists, politically exposed persons (PEPs) databases, and adverse media sources.

6. Decision-making and ongoing monitoring

Manually or automatically approving businesses based on internal risk rules. Monitoring verified companies and stakeholders for any changes, updates, or new risks over time.

Sumsub’s KYB solution helps businesses confidently onboard counterparties while enabling continuous, automated data rechecks and monitoring services to mitigate risk within existing business relationships.

Not all KYB providers are created equal.

Learn how to spot the real deal—from approval rates and onboarding to compliance and fraud protection.

KYB Buyer’s Guide 2025 - Get your copy

FAQ

• What does KYB mean?

  KYB stands for ‘Know Your Business’. It is the process businesses use to verify the identities of their business customers, understand their structure and activities, and work out what level of risk they pose for financial crime.

• How does KYB help prevent financial crimes?

  KYB helps prevent financial crimes by verifying the legitimacy of businesses, identifying UBOs, and detecting shell companies or fraudulent entities involved in money laundering or illicit activities.

• Why is KYB compliance important?

  KYB compliance helps to protect businesses and their customers from fraud, as well as being a regulatory requirement in most jurisdictions. Failure to carry out effective KYB increases the risk of fraud and can lead to regulatory enforcement action, including fines, as well as reputational damage.

• How does KYB differ from KYC?

  KYB and KYC (Know Your Customer) are similar processes, but KYC is used for individual customers rather than business customers.

• What are KYB checks?

  Standard KYB checks include looking at a business’s address, registration, structure, and ownership, as well as checking them against sanctions lists and other relevant watchlists, such as those for adverse media. These checks should be regularly re-run so that any changes in this information are promptly picked up and the customer’s risk score can be updated as required.

• What is the KYB process?

  There are various key steps in the KYB process, starting with collecting information about a business’s identity, ownership, and control structure, then verifying the legitimacy of this information. The nature and purpose of the proposed business relationship should be determined alongside the level of risk for financial crime. A risk-based approach should be taken, with more stringent due diligence checks for high-risk corporate customers. AML screening should be carried out, checking against sanctions lists and other watchlists. There should then be ongoing monitoring of the customer’s activities with appropriate records kept at every stage.

• What documents are required for KYB verification?

  KYB verification typically requires business registration documents, proof of ownership, tax identification numbers, financial statements (if applicable), and details on the Ultimate Beneficial Owners (UBOs).

• Who is an Ultimate Beneficial Owner (UBO) in KYB?

  A UBO is an individual who ultimately owns or controls a business, typically holding 10-25% of shares or voting rights, or having significant influence over a company’s decisions.

• What is Enhanced Due Diligence (EDD) in KYB?

  EDD is a deeper level of verification for high-risk businesses. It requires additional assessment that may include: enhanced background screening, source of funds/source of wealth, financial audits, continuous monitoring, senior management approval.

• How often should KYB checks be updated?

  KYB checks should be updated regularly based on a risk-based approach, with high-risk businesses reviewed more frequently and having standard updates at least annually or when significant changes occur.