Know Your Business (KYB) and Know Your Customer (KYC) are core practices in modern anti-money laundering compliance. Although they focus on different subjects, they both reduce financial crime. KYC verifies individuals and KYB checks the legitimacy of businesses. As financial crime becomes more advanced, it is essential for fintechs, banks, and payment providers to understand how KYB and KYC function, and when to apply them.
What Is KYC (Know Your Customer)?
KYC is the process of verifying the identity of individuals. It is typically used during customer onboarding and throughout the business relationship to assess potential risks and meet compliance requirements. The main goal of KYC is to prevent fraud, identity theft, money laundering, and other financial crimes. By knowing who their customers are, institutions can make informed decisions, reduce risk, and ensure they are following legal and regulatory standards.
What are the Key Components of KYC?
KYC helps confirm a customer’s identity and assess risk. It includes verifying ID documents, checking proof of address, and using biometric tools like facial recognition for added security. Customers are also screened against global watchlists to detect links to sanctions, political exposure, or negative media. These steps help businesses meet compliance requirements and reduce the risk of fraud or financial crime.
Key KYC Regulations to Know
- EU AMLD6 strengthens KYC and anti-money laundering rules across the European Union. The aim is to make customer verification more detailed and consistent.
- FATF Recommendation 10 sets a global standard for customer due diligence and helps countries enhance their KYC practices.
- FinCEN’s CDD Rule requires U.S. institutions to identify and verify who owns and controls business accounts.
By following these regulations, businesses not only stay compliant, but also build trust and contribute to a more secure financial system.
What Is KYB (Know Your Business)?
KYB is the process of verifying the identity and legitimacy of a business. It focuses on legal entities like companies, partnerships, and trusts, helping institutions confirm that the businesses they work with are trustworthy. KYB is important because criminals often use fake companies or complex structures to hide their illegal activities. Strong KYB checks help stop financial crime before it starts.
What Does KYB Typically Involve?
KYB checks help confirm that a business is real, transparent, and safe to work with. They usually include:
- Verifying business registration through official documents such as incorporation certificates or licenses
- Identifying ultimate beneficial owners (UBOs) to see who truly controls the business
- Confirming the company’s address and tax ID to verify its physical presence and legitimacy
- Screening the business and its owners for sanctions, political exposure, or negative media coverage
These checks support compliance and reduce the risk of doing business with illegitimate actors.
Why Does KYB Compliance Matter?
KYB is required under several international regulations that focus on transparency and ownership:
- FATF Recommendation 24 requires accurate information on who owns and controls legal entities.
- FinCEN’s Corporate Transparency Act in the U.S. requires companies to reveal their beneficial owners to help prevent misuse.
- The EU's AMLD6 includes rules that make it mandatory for companies to report full UBO details.
Following these rules helps businesses avoid penalties, protect their reputation, and support the global fight against financial crime. Strong KYB practices also build trust and promote transparency in the business world.
KYB vs KYC: At a Glance
KYC and KYB share the same goal of reducing risk and staying compliant, but they focus on different types of customers. KYC is used to verify individuals, while KYB helps confirm the legitimacy of businesses. Together, they support trust, transparency, and safer financial operations.
| Feature | KYC (Know Your Customer) | KYB (Know Your Business) |
| Applies to | Individuals | Companies, partnerships, legal entities |
| Main Goal | Confirm identity and assess individual risk | Verify business legitimacy and ownership |
| Regulatory Basis | FATF Recommendation 10, AMLD6, FinCEN CDD | FATF Recommendation 24, CTA, AMLD6 |
| Data Collected | ID, address, photo, biometrics | Business license, UBO info, registry documents |
| UBO Identification Required? | Not required unless high risk | Always required |
| Screening Obligations | Sanctions, PEP, and adverse media checks | Sanctions, PEP, and adverse media checks |
| Tools Used | Biometric ID, OCR, eKYC tools | Business registries, UBO verification tools |
Why Is KYB a Priority in 2025?
- In 2025, KYB is receiving more attention as regulators focus on transparency and accountability. The rise of shell companies and complex global transactions has made it essential to know who really owns a business.
- The EU’s AMLD6 now requires KYB checks for all corporate clients, helping to strengthen anti-money laundering efforts. In the United States, the Corporate Transparency Act requires millions of businesses to report their beneficial ownership to FinCEN.
- Countries in the Asia-Pacific region such as Singapore, Australia, and Japan also update their KYB rules. These changes are especially important for crypto firms and payment platforms, where risks are higher and regulations are evolving quickly.
Strong KYB practices are now seen as a global standard for doing business safely and responsibly.
Why is KYB More Challenging Than KYC?
- While KYC is now widely automated and standardized, KYB remains more complex.
- Business registries can be outdated, incomplete, or hard to access, which makes verification slower.
- Ownership structures are often layered and this makes it difficult to identify the true owners.
- For companies operating across borders, differences in local regulations and limited data sharing add further complications.
- Unlike KYC, which follows global guidance from FATF, KYB lacks a universal standard. This makes businesses manage multiple requirements depending on where their clients are based.
| Challenge | Why It Matters |
| Outdated or incomplete registry data | Makes business verification slower and less reliable |
| Complex ownership structures | Makes it harder to identify who truly controls the business |
| Cross-border regulatory differences | Requires adapting to multiple country-specific rules and formats |
| No global KYB standard | Increases manual work and compliance uncertainty compared to well-defined KYC |
KYB and KYC in Practice
Fintechs and Neobanks
- KYC helps verify individuals opening e-wallets or personal accounts, making onboarding fast, secure, and compliant.
- KYB supports the onboarding of small businesses or vendors by verifying their company details and ownership, helping build trust from the start.
Crypto Exchanges
- KYC ensures retail users are verified properly, helping platforms stay compliant and reduce fraud.
- KYB is used to screen institutional clients like OTC desks or custodians, making sure they meet all regulatory standards and pose no hidden risks.
Marketplaces and Payment Service Providers (PSPs)
- KYC helps verify buyers and consumers, making sure transactions are secure and trusted.
- KYB checks sellers, suppliers, and partners to confirm their legitimacy and protect the platform from fraud or misuse.
| Industry | KYC Use Case | KYB Use Case |
| Fintechs and Neobanks | Verifying individuals for e-wallets or personal accounts | Verifying SMEs or vendors during business account onboarding |
| Crypto Exchanges | Verifying retail users to meet AML obligations | Screening institutional clients like OTC desks and custodians |
| Marketplaces and PSPs | Verifying buyers and consumers for secure transactions | Verifying sellers, suppliers, and partners to protect against platform misuse |
How to Simplify KYC & KYB with Sanction Scanner
Staying compliant should be simple. Sanction Scanner helps you easily verify individuals and businesses so you can meet KYC and KYB requirements with confidence. With our all-in-one platform, you can:
- Instantly screen customers and companies against global sanctions, PEP, and media lists
- Access real-time business registry and UBO data
- Securely collect and verify documents through API integration
- Generate audit-ready reports for easy regulatory checks
Whether you are a fintech, crypto platform, PSP, or marketplace, Sanction Scanner helps you onboard faster, stay compliant, and save time. Automate compliance. Cover global standards. Stay ahead of risk. Ready to strengthen your KYB and KYC processes? Request a demo today with Sanction Scanner and our team will provide you with full compliance at speed and 100% accuracy.
FAQ's Blog Post
KYB verifies the legitimacy and ownership of businesses, while KYC focuses on verifying individual customers. Both are essential for AML compliance.
It helps institutions detect shell companies, hidden ownership, and high-risk business relationships. This prevents money laundering and fraud.
It ensures customers are who they claim to be and assesses their risk profile. This protects businesses from identity fraud and financial crime.
Banks, payment providers, fintechs, and other regulated entities dealing with corporate clients. It is mandatory in many jurisdictions under AML laws.
Any business providing financial services or regulated activities to individuals. This includes banks, brokers, crypto exchanges, and insurers.
Company registration documents, shareholder details, Ultimate Beneficial Owner (UBO) identification, and business licenses.
Government-issued ID, proof of address, and sometimes proof of income or source of funds.
Yes, many compliance systems integrate both processes. This ensures full verification of both the business entity and its owners.