Most fraud conversations start with a person. A stolen identity, a fake account, a document that doesn't add up. That's what KYC is built to catch.

But some of the largest financial crimes in history didn't involve a rogue individual. They involved a company or something that looked like one.

The 1MDB scandal saw more than $4.5 billion siphoned from a Malaysian state fund through a web of shell companies and fake transactions, routed across jurisdictions specifically designed to obscure who owned what. Enron hid billions in debt inside off-books subsidiaries that existed on paper and nowhere else. The Panama Papers exposed over 214,000 offshore entities used to launder money, evade taxes, and move dirty money across borders, all behind a facade of legitimate corporate structure.

That's the problem KYB (Know Your Business) exists to solve. And it's fundamentally different from KYC, even though the two often get grouped together or, worse, confused for the same thing.

So, in this guide we’ll break down:

• what each process actually involves;
• where they overlap and where they diverge;
• how requirements differ across jurisdictions;
• whether KYB can be automated in any meaningful way.

What is KYC?

KYC (Know Your Customer) is the process of verifying that your customers are who they say they are. It's been a legal requirement for financial institutions for decades, and has since expanded into fintech, crypto, insurance, iGaming, real estate, lending, buy-now-pay-later platforms, and any other sector where money moves and regulators have taken notice.

At its core, KYC has three components:

1. Customer Identification Program (CIP): collecting basic identity information like name, date of birth, address, and a government-issued ID.
2. Customer Due Diligence (CDD): assessing the risk profile of the customer. This includes, but limited to PEP and sanctions screening, checking if transactions match their stated income, etc.
3. Ongoing Monitoring: transactions are monitored continuously, and customer profiles are reviewed periodically or when behavior changes.

Remember the time you tried opening a bank account? You were asked to upload your passport, take a selfie, and the system checked your identity. That’s KYC.

The subject of KYC is always a person. That's the fundamental constraint — and the reason a separate process had to be built for businesses.

What is KYB?

KYB (Know Your Business) applies the same logic to legal entities. Instead of verifying a person, you're verifying a company: that it actually exists, that it's legitimately registered, that it operates in the way it claims to, and that the people behind it are who they say they are.

That last part is where it gets complicated. Most jurisdictions require identifying the Ultimate Beneficial Owners (UBOs) — the real humans who own or control the business, typically anyone holding 25% or more of shares or voting rights. And because ownership structures can be layered across multiple holding companies, jurisdictions, and nominee arrangements, mapping them isn't always straightforward.

The core components of KYB are:

1. Company Verification: confirming the entity is legally registered — certificate of incorporation, business registration number, operating licenses where applicable.
2. UBO Identification: mapping the ownership structure down to the actual individuals in control.
3. Sanctions & Adverse Media Screening: checking the company and its directors against global watchlists, PEP databases, and negative news sources.
4. Ongoing Monitoring: corporate structures change. Directors are replaced, ownership shifts, new subsidiaries appear. KYB isn't a one-time check either.

One thing worth noting: KYB always contains an element of KYC. Once you've identified the UBOs, you still need to verify them as individuals. The two processes don't run in parallel — one is nested inside the other.

KYC vs KYB: Key Differences

On the surface it seems that the difference is that KYC verifies people and KYB verifies businesses. But the differences go deeper than the subject of verification.

The complexity is one of the key distinctions. A KYC check on an individual has a defined ceiling because there's only so much to verify about one person. A KYB check on a holding company registered in the British Virgin Islands, owned by a Luxembourg entity, whose directors are based in Dubai, has no such ceiling. Every layer of ownership is a new thread to pull.

That's also why KYB takes longer, costs more, and is harder to automate — though not impossible, which we'll get to.

When Do You Need KYC and When KYB?

Once you know the difference between the two, this part might seem obvious, but to make it clear:

If you're onboarding individual consumers — retail banking customers, personal loan applicants, individual crypto users, players on a gambling platform — KYC is what you need. The subject is a person, the process is designed for a person, and KYB adds no value here.

If you're onboarding businesses — merchants on a payment platform, corporate banking clients, B2B fintech customers, agencies on a freelance marketplace — KYB is required. And as established, KYC comes with it, applied to the UBOs once they're identified.

If you're onboarding both — which is increasingly common for platforms that serve freelancers and agencies, or neobanks that offer both personal and business accounts — you need both pipelines running in parallel, with logic that routes each customer to the right flow.

However, there are some more subtle edge cases. For example, sole traders and freelancers. Depending on the jurisdiction, a self-employed individual operating under their own name may only require KYC. But the moment they operate through a registered legal entity — even a one-person Ltd — KYB applies.

What Documents KYB Checks Include

The exact requirements vary by jurisdiction and risk level, but the core document set is consistent across most frameworks.

Company-level information:

• Legal business name and any trading names
• Registration number and jurisdiction of incorporation
• Registered address and principal place of business
• Business activity and industry classification
• Ownership and corporate structure

Supporting documents:

• Certificate of incorporation
• Articles of association or equivalent constitutional document
• Proof of registered address (utility bill, bank statement, official correspondence)
• Operating licenses where the business operates in a regulated industry

UBO-level information:

• Full name, date of birth, and nationality of each beneficial owner
• Residential address
• Nature and extent of ownership or control (percentage held, voting rights)
• Government-issued ID and proof of address for each UBO

Additional checks depending on risk profile:

• Source of funds and source of wealth documentation
• Sanctions, PEP, and adverse media screening (applied to both the entity and its UBOs)
• Financial statements for higher-risk or high-value relationships
• Correspondent bank references in some jurisdictions

The higher the risk rating of the entity, based on industry, geography and ownership complexity, the more of this list gets activated.

KYB Regulations in 2026

Like KYC requirements, the regulations around business onboarding vary in different regions. So, here’s an overview of what regulators expect in all major markets.

United States

The Bank Secrecy Act and USA PATRIOT Act form the baseline. The rule that matters most for KYB specifically is FinCEN's CDD Final Rule, which formally required financial institutions to identify and verify UBOs — anyone holding 25% or more.

The Corporate Transparency Act, which took effect in 2024, went further: most US companies are now required to proactively report their beneficial owners directly to FinCEN, rather than waiting to be asked during an onboarding check.

United Kingdom

KYB in the UK is governed primarily by the Money Laundering Regulations 2017, enforced by the FCA. The UBO threshold sits at 25%, in line with global norms.

What's changed recently: from November 2025, identity verification became compulsory at the point of incorporation and for new director appointments at Companies House. That means the registry itself is now cleaner, which benefits KYB checks that rely on it. But relying on Companies House alone still isn't enough; independent verification remains a requirement.

European Union

The EU has progressively tightened its AML framework through successive directives — 5AMLD and 6AMLD expanded UBO disclosure requirements and broadened the scope of obligated entities significantly.

The AMLA (Anti-Money Laundering Authority) replaces the previous patchwork of national supervisors with a single unified body. For cross-border businesses operating inside the EU, this removes some ambiguity but raises the stakes for non-compliance.

APAC

APAC is the most fragmented of the major regions.

Singapore operates one of the most mature frameworks in the region, with MAS (Monetary Authority of Singapore) enforcing rigorous UBO and AML requirements.

Australia follows AUSTRAC guidelines, with beneficial ownership requirements broadly aligned with FATF standards.

Beyond these anchor markets, consistency drops sharply. Indonesia, Vietnam, and Malaysia are tightening frameworks, but enforcement varies and registry quality is uneven — making manual verification inadequate and automation increasingly essential for anyone operating at scale across the region.

Latin America

Brazil is the most developed market in the region from a KYB standpoint. BCB Circular 3.978/2020 establishes clear obligations for beneficial ownership verification, risk-based due diligence, and suspicious activity reporting.

As of 2023, VASPs are also brought into scope. Mexico has increased regulation around cross-border remittances and real estate, with enhanced due diligence and detailed record-keeping requirements.

The broader regional picture is one of growing convergence toward FATF standards, with PEP screening receiving particular attention given the elevated corruption risk profile across several markets.

The Global Baseline

Underneath all of it sits the Financial Action Task Force FATF, whose recommendations form the floor that most jurisdictions build on. In February 2025, FATF updated its standards to better support financial inclusion while maintaining CDD requirements. It's not binding, but regulators in over 200 countries treat it as the reference point.

How the KYB Process Works

KYB starts with collecting company information and documents (see the list above). This establishes that the entity is real and legally incorporated.

Next comes UBO identification and verification. This step involves mapping the ownership structure down to the individuals who actually control the business, then running KYC on each of them. This is often where the process slows down, especially when ownership is layered across multiple entities or jurisdictions.

Once the entity and its owners are verified, the process moves to AML screening. The AML officer needs to check the company, its directors, and its UBOs against sanctions lists, PEP databases, adverse media, and global watchlists.

A step that often gets underestimated: understanding the nature and purpose of the business relationship. It's essential for ongoing monitoring to mean anything. If you don't know what normal looks like for a given customer, you can't flag when something looks wrong.

Finally, ongoing monitoring. Corporate structures change. Directors are replaced. A jurisdiction that was clean last year can end up in a FATF grey list. KYB requires continuous surveillance, not just a clean bill of health at onboarding.

Doing all of this manually, especially for multiple business clients and across multiple jurisdictions would take weeks. Which brings us to a question: can KYB be automated?.

Can KYB Be Automated?

The short answer is: partially, and increasingly so but unlike in KYC you can’t let the system run the whole process.

You can easily automate data collection and organization. Company registry lookups, UBO mapping from official databases, sanctions and PEP screening, document verification via OCR — all of this can be handled much faster using KYB tools, without an AML officer actively involved.

However, because KYB is more complicated, it requires more judgement. Things like complex ownership structures with multiple layers across different jurisdictions or discrepancies between what a company declares and what registry data shows require human review.

The other hard limit is data availability. Automation is only as good as the registries it pulls from. In markets with mature, digitized company registries like the UK, most of the EU, Singapore, Australia, automated KYB works well. In markets where registry data is incomplete, paper-based, or simply unreliable, like parts of APAC, much of Latin America outside Brazil, automation hits a ceiling and manual verification fills the gap.

So, a good KYB solution can significantly cut down the back and forth when collecting information, screen business clients and UBOs across large databases, saving time on pointless clicking and leaving more time and officers capacity for analysis.

More effective onboarding means less business clients leaving. From a story of this Reddit user, we can see that drop-off rates can be as high as 40%, if KYB is poorly operationalised. Let’s see how you can use Allpass.ai to automate part of your KYB process.

How Compliance Teams Use Allpass.ai for KYB

Meet Sarah. She's an AML officer at a fintech company. Before her company can start processing payments for a new business client, she needs to run KYB. Here's how she does it in Allpass.ai.

Step 1: Collecting Company Information

Sarah starts by building a questionnaire for the business. AML officers have full creative freedom with our questionnaires. This client operates in two jurisdictions, so she adds a few conditional questions and steps up a custom logic. If the company has subsidiaries, a new branch appears asking for their details.

If it operates in a high-risk market, Source of Funds questions kick in automatically. She sends the link to her contact at the company. They fill it in on their end, she gets the data organized and ready for her to review.

Step 2: Verifying the UBOs

The company has two beneficial owners. Sarah creates a verification flow in Allpass.ai — document upload, liveness check, proof of address, AML check with ongoing monitoring and a short questionnaire about their role and source of wealth. She adds both as applicants and sends each of them a link.

One completes it the same day. The other starts, gets pulled into a meeting, and finishes the next morning from where they left off. Sarah doesn't have to follow up once. While she waits, she's working on three other cases.

Step 3: AML Screening

With the UBOs verified, Sarah runs a manual AML check on the company itself. She enters the business name and screens it against sanctions lists, watchlists, and adverse media sources. No matches. The business is clean.

Step 4: Review and Sign-off

Everything Sarah collected is sitting in one system. Before sending it up the chain, Sarah leaves a comment on the profile flagging one thing she wants her manager to double-check — the company's operating license for their secondary market. No email needed. Her manager sees it directly in the platform.

From first contact to approved case, the whole process took three days. Most of that was waiting for the second UBO to complete his verification. The actual compliance work took a few hours.

If your team is still piecing together KYB manually, try Allpass.ai for free and see what the process looks like when it's actually built for compliance teams.