- KYB (Know Your Business) checks help you confirm whether a company is legitimate
- In regulated industries, KYB checks are a mandatory compliance requirement
- Even in industries where they aren't required, KYB checks help protect your business from fraud and other financial crimes
Imagine this: You’re all set to work with a new customer and everything seems promising. It could be a multi-year contract that offers a few years of guaranteed revenue. But what if that potential customer has been involved in fraudulent activity or has compliance issues? No one wants to get caught up in fraudulent activities or unknowingly partner with a company involved in financial crimes like money laundering.
This is where Know Your Business (KYB) checks come in. By running a KYB check, you can confirm that a potential customer or supplier is who they say they are and isn’t involved in unethical or criminal activities.
The summary:
Table of contents
What is a KYB Check?
A KYB check (Know Your Business check) is a business verification process used to confirm that a company is legitimate, legally registered, and compliant with anti-money laundering (AML) regulations.
Organizations use KYB checks to verify:
- Business registration status
- Company ownership structure
- Ultimate Beneficial Owners (UBOs)
- Directors and officers
- Sanctions and watchlist exposure
- Financial stability and payment behavior
- Regulatory compliance risks
KYB checks help your business prevent fraud, identify shell companies, comply with AML regulations, and reduce risk when onboarding customers, suppliers, vendors, or partners.
Why are KYB checks important?
Fraudsters frequently use fake businesses, shell companies, and complex ownership structures to hide illicit activities. Without proper business verification, you could unknowingly engage with organizations involved in money laundering, sanctions violations, corruption, or financial crime.
KYB checks help your business:
- Verify that a company legally exists
- Identify hidden ownership and control structures
- Detect high-risk entities before onboarding
- Meet AML and compliance obligations
- Reduce supplier and customer risk
- Protect brand reputation
For regulated industries, KYB is often a mandatory component of customer due diligence and ongoing compliance programs.
What does KYB stand for?
KYB stands for "Know Your Business."
It is the corporate equivalent of KYC (Know Your Customer), which verifies individuals. While KYC focuses on people, KYB focuses on businesses and their ownership structures.
What information is verified during a KYB check?
A comprehensive KYB check typically verifies:
Business Registration
- Legal business name
- Registration number
- Incorporation date
- Registered address
- Business status
Ownership Structure
- Parent companies
- Subsidiaries
- Shareholders
- Ultimate Beneficial Owners (UBOs)
Company Leadership
- Directors
- Officers
- Key decision-makers
Compliance and Risk Indicators
- Sanctions screening
- Watchlist screening
- Adverse media
- Regulatory actions
- AML alerts
Financial Health
- Credit risk indicators
- Payment history
- Financial filings
- Insolvency records
Most organizations require both KYB and KYC processes as part of a complete AML compliance framework.
What regulations require KYB checks?
Several anti-money laundering regulations require businesses to conduct due diligence on corporate customers and partners, including:
- Bank Secrecy Act (BSA)
- USA PATRIOT Act
- Anti-Money Laundering Act of 2020
- FinCEN Customer Due Diligence (CDD) requirements
These regulations require organizations to understand who they are doing business with and identify the individuals who ultimately own or control a company.
How does the KYB process work?
A typical KYB process follows these steps:
- Collect business information
- Verify company registration
- Identify beneficial owners
- Screen for sanctions and watchlists
- Assess financial and compliance risk
- Approve or reject onboarding
- Monitor for ongoing changes
Continuous monitoring is critical because ownership structures, compliance status, and risk exposure can change over time.
What are the benefits of automated KYB checks?
Automated KYB solutions help businesses:
- Accelerate onboarding
- Reduce manual reviews
- Improve compliance accuracy
- Detect fraud earlier
- Monitor risk continuously
- Scale compliance programs globally
By combining company intelligence, ownership data, sanctions screening, and risk monitoring, automated KYB solutions provide a more complete picture of business risk.
Frequently Asked Questions
What is a KYB check?
A KYB (Know Your Business) check is a business verification process that confirms a company's legitimacy, ownership structure, compliance status, and financial risk.
Who needs KYB checks?
Banks, fintechs, lenders, insurers, marketplaces, payment providers, and B2B organizations commonly use KYB checks to evaluate customers, vendors, and partners.
Are KYB checks legally required?
For many regulated industries, KYB checks are required under AML and customer due diligence regulations.
What is the difference between KYB and AML?
KYB is one component of an AML compliance program. AML regulations require organizations to verify and monitor the businesses they work with, which is accomplished through KYB procedures.
What is a UBO in KYB?
A UBO (Ultimate Beneficial Owner) is the individual who ultimately owns or controls a company, even when ownership is hidden through multiple corporate entities.
How confident are you that a potential customer isn’t involved in fraud?
About the Author
Nileema Ali, Senior Product Manager, Creditsafe
Nileema Ali has more than 16 years of experience in senior compliance and risk management roles within the legal and banking industries. As a consultant for JP Morgan, Deutsche Bank and Wells Fargo, Nileema applies her compliance and risk management knowledge to help businesses make informed business decisions.