KYB (Know Your Business) Verification Guide of 2025

A new study from Juniper Research expects merchant losses from online payment fraud to exceed $362 billion globally between 2023 to 2028, with losses of $91 billion alone in 2028. Scammers who impersonate legitimate businesses play a crucial role in committing online payment fraud via marketplaces and other online services.

In 2024, consumers reported losing more than $12.5 billion to fraud, a 25% increase over the last few years. Imposter scams are particularly prevalent, accounting for $2.95 billion in reported losses. Also, losses to government imposter scams rose by $171 million from 2023, totaling $789 million in 2024.

To stay safe, businesses need to get to know each other before they work together. This involves Know Your Business (KYB)—a process that encompasses a wide range of procedures, including counterparty identification, determining company structure, beneficial owners etc. 

KYB measures are typically required by n AML regulations, 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.

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 verification, or KYB, is a due diligence procedure aimed at establishing 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 compliance and fraud prevention.

KYB compliance

KYB helps AML-regulated companies 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 regulatory watchdogs, including the UK’s Financial Conduct Authority, 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.

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 them to money laundering or terrorist financing risks.

Fraud prevention

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

Fraud can easily make its way into the business sphere. For instance, a fraudster can find a company that hasn’t been in operation for several years, rename it, and start placing orders with suppliers without any intention to pay for them. Before anyone realizes what’s going on, the fraudster has disappeared with millions in goods.

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 on the company
• The company’s official documents include mistakes or edits
• The company’s ownership is changing frequently

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. Usually, this involves the following steps:

1. Collecting information that identifies the company
   The information needed includes:

• Name, registered number, registered office and principal place of business
•  Board of directors or members of the equivalent management body
• Senior management
• The law to which it is subject
• Description of the company’s activities and business model by obtaining a business plan or the articles and memorandum of association for example
• Any license from a regulatory body authorizing the entity to conduct certain activities
• Group structure if part of a group
• Legal and beneficial owners.

2. Collecting company documents
   With updates to regulations like the General Data Protection Regulation (GDPR) and the introduction of the US Data Privacy Framework, businesses must ensure that KYB processes comply with these data privacy standards, especially when handling sensitive corporate and personal information. The collected documents are:

• Articles of association or other governing documents 
• Proof of legal existence (certificate of incorporation)
• Documents disclosing beneficial ownership structure (articles & memorandum of association)
• Proof of registered and physical address, etc.
• Audited financial statements if necessary, i.e. if enhanced due diligence is needed

3. Verifying the identities of beneficiaries

Beneficiaries 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
• 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.

4. 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.

5. Geographical considerations

• 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.

6. 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.

7. Industry-specific requirements

• 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.

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

This involves screening companies and their beneficiaries 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.

9. 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 is kept up to date.

The above measures help companies know their customers better, assess risks, and ensure that partners are not involved in money laundering, terrorist financing, or financial crime.

10. Record-keeping

Businesses must keep copies of documents obtained through conducting due diligence on both individuals and companies. Regulatory bodies mandate that businesses retain all documentation for at least five years after the end of a customer relationship or 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
• Information not acted upon
• Training and compliance monitoring
• Information about the effectiveness of training

Who needs KYB?

The list may differ from jurisdiction to jurisdiction. As an example, the 5th AML directive states that KYB is required for the following AML-regulated entities:

• Financial institutions
• Credit institutions
• Online payment services
• Online banking
• Crypto marketplaces
• Services auditors
• External accountants and tax advisors
• Notaries
• Trusts
• Estate agents
• Gambling services
• Environmental and waste management industries
• 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 car sharing services. Such verification helps expose shell suppliers and the individuals behind them.

How KYB and KYC work together in business verification

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	1. Personal information: name, date of birth, address, and ID documents (passport, driver’s license, etc.). 2.  Additional checks: financial history, transaction monitoring, and risk assessment.	1. Business entity details: registration, ownership structure, key management personnel. 2. 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, car-sharing, 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.

KYC & KYB regulations: Global standards and updates

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.

How Sumsub’s KYB solution helps businesses stay compliant

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.

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.

Step-by-step guide to Sumsub’s KYB verification

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 re-checks and monitoring services to mitigate risk within existing business relationships.

FAQ

• 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).

• 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.

• 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 checks such as enhanced background screening, financial audits, and continuous monitoring.

• 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.