What is KYB? Know your business, explained

KYB meaning: KYB, short for know your business, is the due diligence a regulated firm runs on a company before taking it on as a customer: confirm the company exists, find out who owns and controls it, verify and screen those people, then assess the risk. It is the business counterpart of KYC (know your customer), and it is required by anti-money laundering law for every bank, payment institution, crypto-asset service provider and other obliged entity that onboards business customers.

KYB is not one check. It is a file that contains several, and most of them land on people: on Dotfile over the past year, 88% of KYB cases included at least one person to verify, and 1 in 3 included two or more. Below, a guide for every part of the file.

What does KYB stand for? (KYB full form)

KYB stands for know your business. The full form describes the obligation: before you open an account, process payments or lend to a company, you must know who the company is and who is behind it. In legal texts the term is "customer due diligence" on a legal entity; KYB is the industry name for the same measures.

What is the difference between KYB and KYC?

KYC verifies a natural person: their identity and whether they are on a sanctions or PEP list. KYB verifies a legal entity, and then runs KYC on the people it uncovers: the legal representatives, the beneficial owners and anyone acting for the company. So a KYB file almost always contains KYC checks, and a KYC file never contains a KYB check.

Our KYB vs KYC guide covers where the two overlap.

Why is KYB required?

Because the law requires due diligence on every customer, companies included, and because a company is the easiest way to hide who is really behind a transaction.

• EU, today: customer due diligence under Article 13, Directive (EU) 2015/849 (AMLD4), as transposed in each member state, including identifying the beneficial owner and understanding the ownership and control structure (Article 13(1)(b)).
• EU, from 10 July 2027: the same measures, harmonised and directly applicable, under Article 20, Regulation (EU) 2024/1624, the Anti-Money Laundering Regulation (AMLR). What changes is covered in AMLR 2027: what changes for KYB.
• UK: regulation 28 of the Money Laundering Regulations 2017.
• US: the FinCEN customer due diligence rule, which requires covered financial institutions to identify and verify the beneficial owners of legal entity customers (31 CFR 1010.230).
• Globally: FATF Recommendation 10 on customer due diligence, and Recommendation 24 on the transparency of legal persons.

Firms outside the regulated perimeter, such as marketplaces and B2B platforms, run KYB too, to stop fraud, fake merchants and sanctioned counterparties. For them it is a choice. For an obliged entity it is a legal duty.

What does a KYB check verify?

A complete KYB file answers six questions. Each has its own guide.

A worked example: onboarding a marketplace seller

A payment institution receives an application from Lumen Ceramics BV, a Dutch company that wants to sell on a marketplace it serves.

1. The company. The Dutch business register confirms Lumen Ceramics BV is active, gives its registration number and lists one director, Pieter.
2. The shareholders. The register shows one shareholder: Lumen Holding BV, 100%. A company, so the analysis goes up a layer.
3. The beneficial owners. According to Lumen Holding's shareholder register, supplied by the customer, it is held 60% by Pieter and 40% by Eva. Both hold more than 25% of Lumen Ceramics indirectly (60% × 100% and 40% × 100%), so both are beneficial owners.
4. The people. Pieter acts for the company and is a beneficial owner; Eva is a beneficial owner. Both get an identity check and sanctions, PEP and adverse media screening.
5. The risk. Low-risk activity, a domestic structure, clean screening: standard due diligence, approved.
6. The monitoring. The file is reviewed again on a schedule, and earlier if the register reports a change of shareholder.

One customer, one holding company, two people. That is the typical shape: most KYB files are short, and the long ones are long because the ownership chain is.

KYB case figures: cases with a company built on Dotfile over the past year; aggregates only.

Who needs to do KYB?

Every obliged entity under anti-money laundering law that has business customers. In the EU today, the list in Article 2, Directive (EU) 2015/849 includes banks, payment and e-money institutions, crypto-asset service providers, investment firms, life insurers, auditors, accountants, notaries and lawyers for certain transactions, trust and company service providers and estate agents. From 10 July 2027, Article 3, Regulation (EU) 2024/1624 adds crowdfunding platforms, mortgage and consumer credit intermediaries and others. Licensed firms meet the requirement first at authorisation: see what the regulator checks on AML in an EMI, PI or CASP licence. In practice the heaviest users are fintechs and platforms that onboard thousands of small businesses, where manual review does not scale.

Can KYB use AI?

Yes, and no regulator forbids it. From 10 July 2027, the AMLR requires meaningful human intervention in every decision to take on, refuse or keep a customer, and an explanation the customer can obtain (Article 76(5), Regulation (EU) 2024/1624). What regulators say about AI in compliance sets out where the EU AI Act, AMLA, the EBA, the FCA and the FATF stand and what is binding. If analysts already paste case data into chat tools, give them a governed door.

What else does a KYB team need to know?

• The dates: the AML regulatory calendar, AMLR 2027 for KYB and AMLA, the EU AML authority.
• Payments: verification of payee under the Instant Payments Regulation.
• The team: how to build a compliance department, what you can outsource and what a compliance team costs.

Frequently asked questions

What is the full form of KYB?

Know your business. It names the due diligence a firm runs on a business customer, the counterpart of KYC (know your customer) for individuals.

Is KYB mandatory?

For obliged entities under anti-money laundering law, yes: due diligence on business customers is a legal requirement in the EU, the UK, the US and every FATF member. For other businesses it is a fraud control.

What documents are needed for KYB?

Usually a register extract, the articles of association, a share register or shareholder list when the register does not publish one, an ID document for each representative and beneficial owner and sometimes proof of address or of the source of funds for higher-risk customers.

What is a KYB check?

A single verification inside a KYB file, such as a register lookup, a document check or a screening of the company name. A KYB process chains several of them.

How often should KYB be updated?

Under the AMLR, the gap between two updates of customer information may never exceed one year for higher-risk customers and five years for the others, and a relevant change triggers an update earlier (Articles 26(2) and 26(3), Regulation (EU) 2024/1624). Until 10 July 2027, national rules set the frequency.

Where Dotfile fits

Dotfile runs the whole KYB file in one place: company data from business registers, ownership unravelling across layers and countries, identity verification and AML screening of every person it finds, a configurable risk engine and ongoing monitoring. Data Lineage keeps the source of every value, so the file holds up when a supervisor asks.