Know Your Business (KYB) is the process of verifying the identity, legitimacy, and risk profile of business customers before and during a commercial relationship.
What KYB Includes
| Component | Purpose |
|---|---|
| Entity verification | Confirm the business exists and is in good standing |
| Beneficial ownership | Identify natural persons who own or control the business |
| Risk screening | Check against sanctions, PEP, and adverse media lists |
| Due diligence | Assess risk level and apply appropriate scrutiny |
| Ongoing monitoring | Maintain current knowledge throughout the relationship |
KYB vs. KYC
| Aspect | KYB | KYC |
|---|---|---|
| Subject | Business entities | Individuals |
| Ownership | Must identify UBOs | N/A |
| Data sources | Registries, filings, commercial data | ID documents, credit bureaus |
| Complexity | Higher (structures, layers) | Lower (single person) |
Why KYB Matters
- Regulatory compliance: Required under BSA, CDD Rule, CTA
- Fraud prevention: Verify businesses are real before transacting
- Risk management: Understand who you’re doing business with
- AML/CFT: Prevent money laundering and terrorist financing
For comprehensive coverage, see: What is KYB?
Related: KYC | CDD | UBO | Entity Verification