What Is KYB? Know Your Business Verification Explained
Companies are the vehicle of choice for hiding who really controls money. Know Your Business — KYB — is how regulated firms see through them: confirming that a business customer is real, understanding who owns and controls it, and screening the people behind it.
A business customer has no face, no passport and no date of birth. It has a registration number, a set of directors, a chain of owners — and, somewhere at the end of that chain, people. KYB exists because criminals use companies, trusts and nominee arrangements precisely to put distance between themselves and the money.
If you are deciding which customers need KYC and which need KYB, start with our KYC vs KYB comparison. This guide covers the KYB process itself.
What KYB Covers
KYB answers five questions about a business customer:
- Does it exist? Is it validly registered, and is it active?
- What does it do? Its activities, countries of operation and expected transactions.
- Who controls it? Directors, senior management and authorised signatories.
- Who ultimately owns it? The ultimate beneficial owners, traced through every layer of ownership.
- Is any of it a risk? Sanctions, PEP and adverse media exposure of the company and its people, and its overall risk rating.
The individuals identified — UBOs, directors, signatories — then go through KYC themselves. KYB is therefore not an alternative to KYC; for a business customer it contains it.
The KYB Process, Step by Step
Collect company information
Legal name, registration number, legal form, jurisdiction, registered address, principal place of business, and the nature and purpose of the relationship.
Verify registration
Confirm the company against the official company registry: that it exists, is active, and that the name, number and address match what the customer provided.
Verify constitution and authority
Obtain the articles or equivalent constitutional document and confirm who has authority to bind the company — for example through a board resolution naming authorised signatories.
Identify directors and senior management
Record the directors and senior managers, and verify the identity of those who will act on the account.
Map the ownership structure
Build an ownership chart through every intermediate company, trust and nominee to the natural persons at the end of each chain, calculating indirect percentages along the way.
Identify and verify UBOs
Identify each natural person meeting the ownership threshold — commonly 25% — or exercising control by other means, and verify their identity. Where no one qualifies, record the senior managing official.
Screen the entity and its people
Screen the company, its UBOs, directors and signatories against sanctions, PEP and adverse media sources — including ownership-based sanctions exposure, where an entity owned by designated persons is itself treated as sanctioned.
Assess risk and monitor
Risk-rate the customer, apply enhanced due diligence where needed, and monitor for changes in ownership, directors, registration status and activity.
KYB Requirements: The Regulatory Basis
KYB is not a separate rulebook; it is how customer due diligence applies to legal persons. The global baseline is FATF Recommendation 10 and its interpretive note, which require firms dealing with a legal-person customer to:
- identify the customer and verify its identity — name, legal form, proof of existence, the powers that regulate and bind it, the names of senior management, and the registered office address;
- understand the nature of its business and its ownership and control structure; and
- identify the beneficial owners and take reasonable measures to verify their identity — first by controlling ownership interest, then by control through other means, and otherwise by recording the senior managing official.
Jurisdictions build on this. In the US, FinCEN's Customer Due Diligence Rule requires covered institutions to identify each individual owning 25% or more of a legal-entity customer and one individual with significant responsibility for managing it. In Singapore, MAS Notice 626 requires banks to identify and verify beneficial owners, and Singapore companies must keep a register of registrable controllers. In the EU, the AML framework requires beneficial ownership to be identified and verified, supported by central beneficial ownership registers.
KYB Documents
| Document | What it establishes |
|---|---|
| Certificate of incorporation or registry extract | The company exists and is registered |
| Articles of association or constitution | The powers that regulate and bind the company |
| Register of directors | Who manages the company |
| Register of shareholders or members | The legal owners at the first layer |
| Ownership structure chart | The full chain from the company to its ultimate beneficial owners, with percentages |
| Proof of registered address | Where the company is officially located |
| Board resolution or signatory list | Who is authorised to act for the company |
| Identity documents for UBOs, directors and signatories | Who the individuals behind the company are |
| Financial statements (higher risk) | Scale and nature of the business, source of funds |
Why KYB Is Hard
- Layered and cross-border structures — holding companies in several jurisdictions, each with its own registry format and level of disclosure.
- Nominee shareholders and directors who appear on the register but act for someone else.
- Trusts and foundations, where ownership is replaced by roles — settlor, trustee, protector, beneficiaries.
- Registry data that is out of date or does not include ownership at all.
- Indirect ownership arithmetic — stakes that only cross a threshold when added up across several chains.
Our guide to unwrapping complex corporate structures covers the methodology, the UBO glossary works through ownership calculations, and shell company red flags lists the warning signs.
Ongoing KYB
KYB does not end at onboarding. Companies change owners, directors, addresses and activities — and a change of control can turn a low-risk customer into a sanctioned one overnight. Effective programmes monitor registry changes and rescreen the entity and its people on list updates, rather than waiting for a periodic review. See our perpetual KYC guide for the event-driven model.
Frequently Asked Questions
What is KYB?
KYB, or Know Your Business, is the due diligence a regulated firm performs on a business customer: verifying the company exists, understanding its business and ownership, identifying and verifying its ultimate beneficial owners, screening it and its key people, and assessing its risk.
What is KYB verification?
KYB verification is confirming a business customer's details against independent sources — the company registry for its existence and status, constitutional documents for its powers, and identity verification for its beneficial owners, directors and signatories.
What documents are needed for KYB?
Typically a certificate of incorporation or registry extract, the articles of association, registers of directors and shareholders, an ownership structure chart, proof of registered address, a board resolution or signatory list, and identity documents for the beneficial owners and key individuals.
Is KYB a legal requirement?
Yes, for regulated firms. Customer due diligence laws based on FATF Recommendation 10 require firms to identify and verify legal-person customers, understand their ownership and control, and identify their beneficial owners.
What is the difference between KYB and KYC?
KYC verifies individual customers. KYB verifies business customers — and includes KYC on the individuals behind them, such as beneficial owners, directors and authorised signatories.
Sources
- FATF — The FATF Recommendations (Recommendation 10 and Interpretive Note)
- eCFR — 31 CFR 1010.230, Beneficial ownership requirements for legal entity customers
- ACRA — Register of registrable controllers
This article is general information, not legal advice. Requirements change — check the current text with the regulator before relying on it.
KYB That Reaches the Real Owners
One Constellation verifies companies against registry data, maps ownership to the ultimate beneficial owners, and screens every entity and person in the structure — with an audit trail for each decision.
