Regulatory Area
KYB
Know Your Business (KYB) is the process of identifying, verifying and assessing a legal entity before entering into a business relationship.
In this briefing
- What it is
- Key things to know
KYB involves confirming that the entity exists, understanding its legal form, ownership and control structure, identifying relevant directors and authorised representatives, and establishing the ultimate beneficial owners behind the business.
The process also considers what the business does, where it operates, how it generates revenue and whether its ownership, industry, counterparties or jurisdictions create elevated financial crime or sanctions risk. Like KYC, KYB continues throughout the relationship and should be updated when the company's structure, activities or risk profile changes.
Key things to know
Legal existence does not establish legitimacy
A company may be properly incorporated but still present material financial crime risk. Firms need to understand the nature of its activities, commercial rationale, operating footprint, regulatory status and expected use of the product or service.
Ownership and control structures can be complex
KYB must look beyond the immediate shareholder register. Multi-layered ownership, trusts, nominees, partnerships and offshore entities may require further investigation to identify the individuals who ultimately own or control the business.
Beneficial ownership thresholds are not the whole test
A person may exercise control without holding the formal ownership threshold. Firms should consider voting rights, appointment powers, contractual influence and other forms of effective control.
Verification sources vary in quality and availability
Company registers differ significantly across jurisdictions. Some provide reliable ownership and director data, while others may be incomplete, outdated or inaccessible. Firms need a defined hierarchy of evidence and procedures for resolving conflicting information.
The entity and its connected persons both require assessment
KYB may involve screening the company, beneficial owners, directors, authorised signatories and other relevant controllers. The overall risk assessment should consider the combined picture rather than reviewing each party in isolation.
KYB should connect to ongoing transaction and activity monitoring
The business profile established during onboarding should inform monitoring after the relationship begins. Activity that does not align with the stated business model, expected volumes, jurisdictions or counterparties should trigger review and possible escalation.
For general information only. Not legal, regulatory or compliance advice.
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