Know your business (KYB)
Also known as: KYB, business verification, know your business customer, beneficial ownership verification, UBO verification
Know your business (KYB) is the process of verifying a company before a bank or payment provider works with it: confirming the business is real, identifying who ultimately owns and controls it, and checking for sanctions and money-laundering risk.
While KYC checks a person, KYB has to look through layers of companies to find the humans behind them. That's exactly where shell companies try to hide.
Know your business (KYB), explained at three levels
At home
KYB is like a background check on a company instead of a person. Before a bank lets a business open an account, it confirms the company is legally registered, then traces who actually owns and controls it, peeling back any layer of other companies until it reaches real people. It's the business version of the ID check you go through when you open a personal account.
At work
Know your business is the due diligence a bank or payment provider runs before serving a company. It confirms the company is registered and active, checks its address and line of business, identifies directors and the people who ultimately own or control it, and screens all of them against sanctions lists. Businesses care because it decides how quickly they can open accounts or accept payments.
At home
The key idea in KYB is the 'beneficial owner,' the real person who ultimately owns or controls a company. In Canada, the threshold for an individual with significant control is generally 25% of shares or votes, or control in practice. If a company is owned by another company, the checker follows the chain upward, holding company by holding company, until it reaches people. Each of those people then goes through a personal identity check, the same kind used when you open an account.
At work
A KYB process has several stages. It verifies the entity against government registries such as Corporations Canada, collects an ownership chart, and identifies directors and beneficial owners. It then runs KYC on those individuals, screens the company and its people against sanctions and politically exposed person lists, and scores risk by industry, geography, and business model. After onboarding, ongoing monitoring watches for ownership changes, adverse media, and unusual transaction patterns that could signal a problem.
At home
Shell companies are often built in layers across several countries, so the same person may hide behind four or five entities, trusts, or nominee directors. Each layer may sit in a registry that publishes little or verifies nothing. While automated KYB tools can stitch registries together quickly, they can only connect what's been filed truthfully. In my view, KYB is only as good as the registries it relies on, which is why investigators often find real owners through leaks, not official records.
At work
KYB at scale relies on registry data APIs, document verification, entity resolution across jurisdictions, and risk-based review queues. The policy landscape keeps shifting: the EU created a new Anti-Money Laundering Authority in Frankfurt under its 2024 AML package, Canada expanded its beneficial ownership regime, and the US narrowed its reporting rule in 2025. Firms should design KYB to adapt to rule changes, rather than hard-coding one country's thresholds.
Real-world examples
At home
Thomas started a small consulting company and applied for a business account. The bank asked for his articles of incorporation and confirmation that he was the sole owner. Because he had everything ready, the account opened in two days.
At work
Nadia runs onboarding at a payments startup. A new merchant was owned by a holding company in one country, which was owned by a trust in another. KYB checks couldn't identify a real owner, so Nadia's team declined the application, a decision their compliance lead later called the right one.
How it compares
| feature | Know your business (KYB) | Know your customer (KYC) |
|---|---|---|
| Who is checked | A company and the people who own or control it | An individual |
| Key documents | Incorporation records, ownership charts | Government ID, proof of address |
| Main risk | Shell companies hiding real owners | Identity theft and fake identities |
| Complexity | Often multiple layers and countries | Usually one person |
| Relationship | Includes KYC on owners and directors | Stands alone |
KYB extends KYC from people to companies, then back to the people behind them.
For analysts
KYB is where onboarding speed and compliance collide. I'd map every manual step in your KYB process and find the ones caused by missing data, not genuine risk. Fixing data collection upfront usually cuts approval times more than any new tool.
History & origin
KYB grew out of anti-money-laundering rules that, for decades, focused mainly on individual customers. The Financial Action Task Force strengthened its guidance on beneficial ownership over the 2010s and revised its standard on transparency of legal persons in 2022. The 2016 Panama Papers leak showed how easily shell companies hid owners, which pushed governments to create ownership registries. Canada began requiring federally incorporated companies to file information on individuals with significant control with Corporations Canada, and launched a public registry in January 2024. The US Corporate Transparency Act required beneficial ownership reports, but in March 2025 FinCEN exempted US-formed companies, narrowing it mostly to foreign entities. In my opinion, KYB remains far weaker than it should be, because registries still mostly rely on companies telling the truth about themselves.