KYB
KYB (Know Your Business) is the process of verifying a business entity's identity, ownership structure, and legitimacy before providing financial services. It confirms that the business is legally registered, identifies its beneficial owners, and assesses its risk profile to prevent shell companies from being used for money laundering or fraud.
KYB extends KYC principles to the business context. Where KYC verifies an individual's identity, KYB verifies a business entity: its legal registration, directors, shareholders, ultimate beneficial owners (UBOs), and the nature of its activities. For financial institutions and payment service providers, KYB is mandatory before providing services to business customers.
KYB complexity scales with business complexity. Verifying a sole trader requires confirming one person's identity plus business registration. Verifying a multinational corporation with complex ownership through holding companies across multiple jurisdictions requires tracing the ownership chain to identify every individual with 25%+ beneficial ownership. That can mean tracing dozens of corporate entities across multiple countries.
For marketplace platforms, KYB is required for seller onboarding above certain transaction thresholds. Platforms operating as payment service providers must conduct KYB on all business sellers under anti-money laundering regulations.
Shell companies and complex corporate structures are frequently used to obscure the true ownership of illicit funds. KYB is the mechanism for penetrating these structures to identify who ultimately controls the business and whether they pose a financial crime risk. Thorough KYB also protects platforms from unwittingly facilitating payments to sanctioned entities whose beneficial ownership was not investigated.
- UBO identification in complex ownership structures requires tracing multiple corporate layers
- Corporate registry data quality varies significantly by jurisdiction
- Document collection from business customers creates onboarding friction that affects activation rates
- Ongoing monitoring requirements require re-verification when ownership structures change
- Cross-border KYB requires familiarity with diverse corporate registration systems and document types
A B2B marketplace implements risk-tiered KYB: light-touch verification for sellers below £10,000 annual GMV and enhanced UBO investigation for sellers above the threshold. Automated KYB covers 85% of sellers with minimal manual intervention. The 15% requiring enhanced checks are managed by a three-person compliance team. Seller onboarding completion rates improve by 31% versus the previous manual KYB process.
Related Concepts
Nium's compliance infrastructure includes KYB capabilities for business customer onboarding, covering corporate entity verification, director identification, UBO investigation, and ongoing monitoring for changes in ownership or risk status. Nium's KYB processes comply with regulatory requirements across its operating jurisdictions.
Answers you didn't know you needed.
What is the difference between KYC and KYB?
KYC (Know Your Customer) verifies individual customer identities. KYB (Know Your Business) verifies business entity identities, including corporate structure, directors, and ultimate beneficial owners. KYB involves KYC of the key individuals associated with the business.
What is a UBO?
A UBO (Ultimate Beneficial Owner) is the natural person who ultimately owns or controls a business entity, typically defined as any individual holding 25% or more of the ownership or voting rights. Identifying UBOs is a core KYB requirement.
What documents are typically required for KYB?
Standard KYB documentation includes: certificate of incorporation, registered address confirmation, director identification, shareholder register, KYC on UBOs (passport, proof of address), and in some cases audited accounts or proof of business activity.
How does automated KYB work?
Automated KYB uses API connections to corporate registries, commercial business databases, and identity verification services to check company details, director information, and UBO records without manual data collection. Automation covers standard corporate structures; complex or high-risk cases require human review.
Does Nium conduct KYB on its clients?
Yes. Nium conducts KYB on all business clients as part of its regulatory compliance obligations. The scope and depth of KYB varies by client type, transaction volume, and risk profile.