Know your businessKYB

The same duty, but for company customers.

Before doing business with a company, a bank or payments provider confirms the company is real, finds out who owns and runs it, and checks that it is not tied to crime.

Verification of a legal entity's registration, status, and controlling parties. A legal entity is an organization, such as a company, that the law treats as a separate party, and controlling parties are the people who own or run it.

Know your business (KYB) typically checks several things:

• Registration, by confirming the company exists in an official registry.
• Status, by confirming it is active and in good standing.
• Address and activity, by confirming where it operates and what it does.
• Ownership, by tracing who owns it, including the ultimate beneficial owners.
• Directors and signatories, by identifying who can act for the company.
• Screening, by checking the company and its people against sanctions and adverse media.

A KYB review usually runs in these steps:

1. The company submits its details and documents.
2. The institution checks them against official registries.
3. It maps the ownership structure and identifies the people behind it.
4. It verifies those people and screens them.
5. It assigns a risk level and decides how to proceed.

KYB is harder than KYC in some ways, because registries differ by country and ownership can pass through several layers of companies in different jurisdictions.

KYB sits next to terms that are easy to mix up:

• Know your customer (KYC) verifies an individual, while KYB verifies a company and the people behind it.
• Ultimate beneficial owner (UBO) is the real person who ultimately owns or controls the company, which KYB works to identify.
• Customer due diligence (CDD) is the wider risk assessment that KYB feeds into.

For more, see What Is KYB and Why Is It Critical for Security, Compliance, and Trust?