What is KYB: the set of checks a regulated firm runs to establish that a business customer is real, who ultimately owns and controls it, and whether its stated activity matches what it actually does
Know your business, shortened to KYB, is customer due diligence applied to a company instead of a person. Where know your customer asks who an individual is, KYB asks whether the business on the application exists at all, which natural persons sit behind it, and whether what it says it does lines up with what it demonstrably does. Banks, payment providers, lenders and insurers run KYB when they onboard a merchant, a corporate borrower, a business policyholder or a supplier.
It matters because a company is cheap to create and easy to hide behind. A registry entry proves that paperwork was filed, not that a business trades. Firms that lose money to shell companies usually held a complete document set; what they never established was that anything real stood behind it. KYB sits inside the wider anti money laundering programme, the requirements differ by country, and this entry describes practice, not the law of any one jurisdiction.
How KYB works
- Registry and documents. Pull the official registry extract and verify the legal name, registration number, status, registered address and directors against the application.
- Beneficial ownership. Unwrap the ownership chain, holding companies included, until it ends at natural persons, then verify those people the way KYC verifies any individual. Control can also arise without shares, through voting or appointment rights.
- Screening. Sanctions, politically exposed persons and adverse media, on the entity and on the owners.
- Licensing and activity. Confirm the business holds the licences its stated activity requires, and that the stated activity is plausible for its size and history.
- Premises and operations. Confirm the business actually operates from where it claims: signage, stock, equipment, staff, activity. This is the step that catches a mailbox posing as a wholesaler.
- Ongoing monitoring. Ownership, directors and activity change. The file has to follow.
What to record in a KYB file
The registry extract with its date. The ownership chain with evidence for every layer, not only the last one. Screening results and the decision taken on each hit. For the premises step, visual evidence that can stand on its own later: photos or video of the location, signage and operations, each a timestamped photo with geotagging where the person capturing consented to share location, plus a record of who captured it and when the firm received it. The whole sequence of checks and decisions belongs in an audit trail, because the question a regulator asks is not only what you concluded but what you looked at and when.
KYB example: the wholesaler with no warehouse
A payment provider onboards an electronics wholesaler. The registry extract, the bank account and the director identification all check out. The premises step does not: the registered address is a serviced office, and the applicant's website photos trace back to a stock-image library.
Instead of declining on suspicion, the onboarding team asks the applicant to walk through the warehouse they claim to operate and record it on their own phone, showing the signage, the stock and the goods-out area. What comes back shows a real warehouse with another company's name above the door. That is not proof of wrongdoing by itself, but it is a concrete reason to ask the next question, and the account stays closed until the answer makes sense.
What KYB does not do, and the mistakes people make
It is not a credit assessment. A business can be perfectly real and still a bad risk. Creditworthiness is a separate analysis.
It does not make fraud impossible. A verified business can still behave badly later. KYB establishes who you are dealing with, and monitoring watches what they then do.
The common mistakes: treating the registry extract as verification rather than a starting point; stopping at the first layer of ownership when the real owner sits two holding companies up; accepting premises photos the applicant emailed, with no way to tell when or where they were taken; and running KYB once at onboarding and never again, so the file describes a company that stopped existing in that form years ago.
Where the KYB file goes
Into the customer file owned by the compliance or onboarding team, kept for the retention period the local regime sets. It is the record the firm produces when a regulator or auditor asks why this customer was accepted, so every conclusion in it should point at the evidence behind it.
For the premises and operations step, Venta Capture, a product of VentaVid, is one way to collect the evidence. The applicant receives a secure, personal capture link and follows guided steps in the mobile browser with no app: the signage, the premises, the stock, the activity, in the order the onboarding team defined. What is recorded arrives timestamped, located where consented, and digitally sealed on a case the team reviews. The compliance judgment itself, sanctions, ownership, licensing, stays with the institution's own team; the capture supplies the evidence it judges on. See Venta Capture.
