Know your business (KYB)

A KYB check is the process of verifying a business before working with them. This often involves verifying information such as the business’s physical address, phone number, source of funds, and business registration or license, and may also include an analysis of business risk based on location. For example, the Financial Action Task Force (FATF) regularly releases guidance on international territories under increased monitoring for potential money laundering and terrorist efforts.

KYB also involves identifying and verifying that the business’s Ultimate Beneficial Owners (UBOs) are real and aren’t involved in criminal activity.

KYB compliance means a company is following Know Your Business rules. This involves performing suitable due diligence on businesses and their Ultimate Beneficial Owners before working with them — and continuously performing AML checks throughout the business relationship. While businesses can’t detect all potentially fraudulent transactions, compliance with FINRA and other regulations requires implementing reliable and repeatable processes to ensure companies understand who they’re dealing with before allowing or rejecting transaction requests.

While Know Your Customer (KYC) refers to verifying customer identities before carrying out transactions, Know Your Business (KYB) frameworks require companies to verify the businesses they work with — and the people behind those businesses — to assess the AML/CFT risk.