Table of contents
Know Your Business (KYB) is the process of verifying that a business customer is legitimate: confirming its legal registration and status, mapping its ownership structure, and identifying and screening its ultimate beneficial owners. KYB is the corporate equivalent of KYC and is required of regulated firms that onboard company customers.
For a plain-language walkthrough aimed at checking one company rather than running KYB at scale, see how to verify if a company is legitimate.
TL;DR
KYB is the verification of a company rather than a person: confirming it is legally registered and operating, identifying the ultimate beneficial owners behind it, and screening the business and its owners against sanctions, PEP and adverse-media data. Regulators require it, generally obliging firms to identify beneficial owners at a 25 percent threshold. It is harder than KYC because companies can hide behind layers of ownership across jurisdictions, and because ownership changes, so it works best as ongoing monitoring. The practical challenge is resolving true ownership across many registries, which is where automation and broad coverage matter most.
What is KYB (Know Your Business)?
Know Your Business, usually shortened to KYB, is the set of checks a regulated firm runs to confirm that a company it is about to deal with is real, legally constituted, and not a front for financial crime. Just as Know Your Customer, or KYC, establishes that a person is who they claim to be, KYB establishes that a business is what it claims to be, and reveals the people standing behind it.
The reason KYB exists as a distinct discipline is that businesses are not people. A company is a legal construct that can own other companies, be owned by others, operate across borders, and change hands without anyone obvious being named. Criminals exploit exactly this, using shell and layered structures to move and hide illicit funds. KYB is the process designed to see through that: to verify the entity, understand who ultimately controls it, and decide whether it is safe to onboard. It sits alongside KYC software in any complete compliance stack, but it answers a different and often harder question.
Why does Know Your Business matter?
KYB matters for two reasons: it is legally required, and it is a genuine defence against fraud and money laundering. On the legal side, anti-money-laundering regimes worldwide oblige regulated firms to identify and verify the beneficial owners of their business customers before onboarding them, and to keep that information current. Failing to do so is a compliance breach that supervisors penalise heavily.
On the risk side, business relationships are where a great deal of financial crime hides. A company that looks ordinary on the surface may be majority-owned by a sanctioned individual, controlled by a politically exposed person, or structured specifically to obscure the flow of illicit money. Without KYB, a firm can unknowingly onboard, and process payments for, exactly the entities the rules are meant to keep out. Done well, Know Your Business protects the firm from regulatory penalties, from becoming a conduit for laundering, and from the reputational damage that follows either. It is the foundation of any AML compliance programme that serves business customers.
What does a KYB check verify?
A thorough KYB check covers four things. First, the entity itself: its legal name, registration or company number, registered address, jurisdiction of incorporation, and current status, cross-referenced against official corporate registries to confirm the business is genuinely registered and active. Where the company operates in a licensed sector, the check also confirms it holds the necessary licences or permits.
Second, ownership. The check maps the ownership structure to identify the ultimate beneficial owners, the natural people who ultimately own or control the company, typically defined as those holding 25 percent or more of the shares or voting rights, or exercising control by other means. Third, the people in charge: directors, officers and significant shareholders. Fourth, risk screening: the business, its directors and its beneficial owners are all screened against sanctions lists, politically exposed person data and adverse media. The evidence for all of this comes from corporate and beneficial-ownership registries, filings, shareholder and trust records, and identity verification of the natural persons involved, the same enhanced due diligence logic applied to entities.
What is the difference between KYC and KYB?
The simplest way to put it: KYC verifies a person, KYB verifies a company, and KYB then loops back to KYC for the people it uncovers. KYC confirms an individual's identity using documents, chip reads and liveness. KYB confirms a business is legitimate and, crucially, identifies the individuals who ultimately own or control it, at which point each of those beneficial owners typically has to be verified as a person in their own right.
So KYB is broader and usually more complex. A KYC check has one subject; a KYB check may have many, because resolving ownership can surface a chain of holding companies and several ultimate beneficial owners, each needing verification and screening. The two are complementary halves of onboarding: a firm serving businesses needs both, and the strongest programmes run them together so that verifying a company automatically triggers verification of the people behind it. We cover the distinction in depth in our guide to KYC vs KYB.
| KYC | KYB | |
|---|---|---|
| Subject | An individual | A company |
| Verifies | Identity, address, date of birth | Registration, status, ownership |
| Output | A verified person | A verified entity plus its verified UBOs |
| Sources | ID documents, biometrics, credit data | Company registers, filings, UBO registers |
| Ends when | The person is verified | The owners have themselves been through KYC |
Who needs to perform Know Your Business checks?
Any regulated firm that onboards businesses as customers, partners or counterparties needs to perform KYB. That includes banks and payment providers opening accounts for companies, fintechs and marketplaces onboarding business sellers or merchants, crypto platforms serving corporate clients, lenders extending business credit, and insurers and professional-services firms with corporate clients. In short, if your customer is a company and you are regulated, KYB is not optional.
Beyond the strictly regulated, many firms adopt KYB voluntarily as a fraud and risk control, because onboarding a fraudulent or misrepresented business can cause direct financial loss even where no AML rule applies. Marketplaces and platforms, in particular, increasingly verify business users to protect their ecosystems. The common thread is that wherever money or trust flows to a company, knowing who really stands behind that company is a basic protection, which is why KYB has moved from a banking-only requirement to a broad business verification need.
How does KYB verification work?
A modern KYB verification runs as a sequence. It begins by collecting the company's core details and confirming them against official registries: is the entity registered, active, and as described. It then resolves the ownership structure, working through holding companies and shareholdings to identify the ultimate beneficial owners, and verifies the identity of those people using the same document, chip and liveness checks as individual KYC.
Next, it screens the business and every uncovered owner and director against sanctions, PEP and adverse-media data, and assesses the overall risk of the relationship. Finally, because none of this stays static, it establishes ongoing monitoring so that changes, a new owner, a director becoming a PEP, a fresh sanction, or emerging adverse media, are caught after onboarding rather than missed. Automating this end to end is what turns KYB from a slow, manual investigation into a fast, repeatable check, and it depends on broad registry coverage and reliable ownership resolution, the foundation of decentralised KYC and KYB infrastructure alike.
The KYB process, step by step
- Collect the company’s details: legal name, registration number, jurisdiction, registered and trading addresses.
- Verify against the official register: confirm the entity exists, the details match, and the status is active.
- Check the filing history: overdue accounts or confirmation statements are a signal in themselves.
- Map the ownership structure: identify the shareholders and work upward through every intermediate entity.
- Identify the ultimate beneficial owners: apply the threshold, including indirect holdings multiplied along each chain.
- Identify directors and controllers: the people who control the company without owning it.
- Run KYC on those individuals: identity documents, liveness, sanctions, PEP and adverse media.
- Screen the company itself: sanctions and adverse media on the entity and any parent.
- Risk-rate the relationship: jurisdiction, sector, structure complexity, transparency of the register.
- Record and monitor: document every step, then watch for changes in ownership, status and screening results.
Steps two to ten are what KYB software automates: the register record is purchased live, ownership is traversed to natural persons, and each owner completes a linked identity check before the case can be approved.
What documents does a KYB check require?
Certificate of incorporation, a current register extract, articles of association, the shareholder register or an ownership chart, the register of directors, proof of trading address, and identity documents for each ultimate beneficial owner and director. Requirements vary by jurisdiction and by the risk rating of the relationship; a low-risk domestic company may need only the register extract and one verified director, while a layered cross-border group needs the full set at every tier.
KYB requirements by jurisdiction
Position as of 18 September 2026. This section is re-checked whenever one of these regimes changes.
- European Union: today the fourth and fifth anti-money-laundering directives, transposed nationally, with a “more than 25 percent” beneficial ownership test and national UBO registers. From 10 July 2027 Regulation (EU) 2024/1624 (the AMLR) applies directly, with a harmonised “25 percent or more” test, a mandatory assessment of both ownership and control, and the power to set a lower threshold for higher-risk categories by delegated act.
- United Kingdom: the Money Laundering Regulations 2017 require identifying and verifying beneficial owners (more than 25 percent of shares or voting rights, or control), cross-checked against the People with Significant Control register at Companies House. Under the Economic Crime and Corporate Transparency Act 2023, identity verification for directors and PSCs became mandatory on 18 November 2025.
- United States: FinCEN’s Customer Due Diligence Rule (31 CFR 1010.230) requires banks, broker-dealers, mutual funds and futures firms to identify each individual holding 25 percent or more of a legal-entity customer plus one person with significant control. Corporate Transparency Act reporting to FinCEN has, since the March 2025 interim final rule, applied only to foreign companies registered to do business in the US; a final rule was still pending in September 2026.
- Australia: the AML/CTF Amendment Act 2024 extends customer due diligence, including beneficial ownership at 25 percent or more or control, to lawyers, accountants, real estate professionals and trust and company service providers from 1 July 2026, with AUSTRAC as supervisor.
- Global baseline: FATF Recommendations 24 and 25 set the standard on beneficial ownership transparency for legal persons and arrangements that each of the regimes above implements.
Common KYB failures
- Stopping at the first corporate shareholder instead of tracing to a natural person.
- Verifying the company but never verifying the UBOs as individuals, so a person identified in one system is never checked in another.
- Treating KYB as a one-time onboarding gate rather than monitoring status, ownership and screening results for change.
- Accepting a customer-supplied ownership chart without independent confirmation against the register.
- Failing to document why a UBO could not be identified and which fallback, control by other means or senior managing official, was applied.
What are the challenges of KYB?
The central challenge of KYB is ownership opacity. Real ownership is often buried under layers of holding companies, spread across jurisdictions with different disclosure rules, and sometimes deliberately obscured. Resolving the true ultimate beneficial owners can mean traversing several registries in several countries, each with its own format, language and reliability, and some beneficial owners sit below the reporting threshold specifically to stay hidden.
The second challenge is data: corporate registries vary enormously in coverage and quality, and beneficial-ownership registers are still uneven across the world, so no single source is complete. The third is keeping current, since ownership and control change constantly and a KYB check that was accurate at onboarding can be stale within months, which is why perpetual, ongoing monitoring matters. The fourth is friction: business onboarding that demands endless documents loses customers, so the goal is thorough verification that is still fast. Meeting all four at once is what separates a capable KYB solution from a box-ticking one.
What happens when no natural person owns 25 percent?
One of the most common and misunderstood outcomes in Know Your Business is that no individual reaches the 25 percent threshold at all. Take an anonymised example, based on a real structure with names and figures changed: an Italian software company owned 87 percent by a Belgian holding company, which sits under a chain of Luxembourg vehicles and a private-equity fund, ending at a general partner in Guernsey where registry coverage is unavailable. Traced through, the highest any natural person reaches is about 23 percent, the group's chief executive. A mechanical hunt for the 25 percent owner returns nobody.
That is not the same as there being no owner to record. When no natural person meets the threshold, the law prescribes a fallback: test for control by other means, look through the ownership chain as far as coverage allows, and, failing that, record the senior managing officials, usually the board, as the beneficial owners. Italy codifies this in Article 20 of Legislative Decree 231/2007, and equivalent senior-managing-official fallbacks exist across the EU. The correct output is therefore never a blank no UBO found; it is a defensible record of the highest effective owners, the point where coverage ran out, and the officials recorded in place of a 25 percent owner. This is precisely where shallow KYB, which stops at the first company on the register, quietly fails.
How does Zyphe approach KYB?
Zyphe treats KYB as an ownership-resolution problem and solves it with live register data and automation. When an applicant submits, the authoritative register record is purchased and the submission is graded against it, drawing on more than 240 registries. Coverage is decided per country in three latency tiers, seconds, minutes, or days where a record has to be retrieved by hand, and where a country has no coverage the flow falls back to an applicant declaration that is marked as declared rather than verified.
Ownership discovery follows corporate shareholders through every available tier until it reaches natural persons, bounded by a credit budget you set rather than a fixed layer limit. Branches the budget cuts are marked truncated and can be extended node by node behind a cost preview; a branch that reaches a jurisdiction with no register stays visible as unresolved and is held as a UBO proxy, never reported as a person. The threshold is 25 percent direct or indirect, with stakes multiplied along each chain and a documented fallback when nobody crosses it. Each UBO and director then completes a linked KYC flow, and the KYB cannot be approved until it does. Verification results, logs and proofs are retained; the documents themselves sit in the individual’s own encrypted vault, not in a central store. See the KYB software page for the full workflow, or book a demo with a structure that breaks your current process.
The bottom line
KYB is KYC's harder sibling: instead of verifying one person, it verifies a company and then unmasks the people who ultimately own or control it. It is legally required for regulated firms serving business customers, and it is a real defence against the shell and layered structures that financial crime relies on. The difficulty is ownership opacity and uneven registry data, compounded by the need to keep everything current. The firms that do KYB well combine broad registry coverage, recursive ownership resolution, screening of every uncovered owner, and ongoing monitoring, so verification is both thorough and fast.
Related resources
- KYB software
- KYC vs KYB: what's the difference?
- KYC Software: 2026 Buyer's Guide
- Enhanced due diligence workflows
- PEP screening in 2026
Cited sources
Written by Michelangelo Frigo (Co-Founder at Zyphe) Reviewed September 18, 2026 Michelangelo Frigo is a privacy and identity infrastructure expert and co-founder of Zyphe.