TLDR
KYB is a verification process financial institutions and payment providers use to confirm a company's identity, ownership, and legitimacy before providing services.
What is Know Your Business?
Know Your Business (KYB) is a compliance and verification process used by banks, payment service providers (PSPs), fintechs, and other financial institutions to confirm that a business is legitimate before providing financial services. KYB helps organisations verify a company's identity, legal status, ownership structure, and beneficial owners. It is a key part of anti-money laundering (AML), counter-terrorist financing (CTF), and broader regulatory compliance programmes.
Before a business can open an account, access payment services, or establish a financial relationship, providers typically perform KYB checks to understand who they are dealing with and assess potential risks.
How KYB works
The exact process varies between providers and jurisdictions, but KYB typically involves collecting and verifying information about a business.
Common checks include:
- Company registration and incorporation details.
- Legal business name and registered address.
- Directors and authorised representatives.
- Ultimate beneficial owners (UBOs).
- Corporate ownership structure.
- Business activities and industry classification.
- Licensing or regulatory status, where applicable.
Providers may also perform sanctions screening, adverse media checks, and risk assessments as part of the review process.
KYB vs KYC
Know Your Business and Know Your Customer are closely related compliance processes, but they focus on different types of customers.
- KYB is used to verify businesses and legal entities. It focuses on information such as company registration details, ownership structure, ultimate beneficial owners (UBOs), business activities, and corporate risk factors. KYB is typically performed during business onboarding and helps financial institutions assess business-related risks.
- KYC is used to verify individual customers. It focuses on personal identity, address verification, and individual risk assessment. KYC is commonly performed when individuals open accounts or access financial services.
Many regulated organisations conduct both KYC and KYB as part of their anti-money laundering (AML) and compliance programmes. Together, these processes help financial institutions understand who they are doing business with and identify potential financial crime risks.
Why KYB matters
KYB helps financial institutions reduce fraud, money laundering, sanctions risks, and other forms of financial crime. Without proper business verification, providers may unknowingly onboard shell companies, fraudulent businesses, sanctioned entities, or organisations attempting to conceal their ownership structure.
For legitimate businesses, effective KYB processes help build trust and enable access to banking, payment processing, merchant accounts, and other financial services.
KYB and merchant onboarding
KYB is often a key part of merchant onboarding and merchant underwriting. Before approving a merchant for payment processing, a provider typically needs to verify that the business exists, identify its owners, understand its activities, and assess its risk profile. The results of KYB checks can influence onboarding decisions, transaction limits, settlement terms, monitoring requirements, and overall risk classification.