Know your business is what customer due diligence becomes when the customer is a company rather than a person. The acronym is newer than the work and it is used loosely, but the difference it points at is real: a company cannot show you a passport, and the thing you actually need to know is which human beings stand behind it. This page is about what that file holds and where it is harder than it looks.
The company is the customer, the people are the point
A KYB file has two halves. The first is the entity itself: that it exists, that it is registered where it says it is, what it does and who signs for it. The second is the people, and this is the half that takes the time. You are looking for the individuals who own or control the company, which means reading through holding structures rather than accepting the first name on the certificate. The federal rule sets the ownership threshold at 25 percent, so every legal entity customer's file has to name each individual who directly or indirectly owns 25 percent or more of it.
Why KYB takes longer than KYC on a person
Identifying a person is bounded work: there is one of them and the evidence is standard. Identifying a company is unbounded until you decide where to stop, because ownership can run through two or three layers and each layer is another set of documents from another registry, sometimes in another language. That is why a KYB file needs a stated stopping rule in your own policy, and why the minutes-per-file figure for business customers in the free checklist is several times the figure for individuals in most firms that measure it.
The part nobody schedules: ownership changes
A person's identity does not usually change between reviews. A company's ownership does, and it changes without telling you. This is the single strongest argument for a review date on a KYB file rather than a one-time check at onboarding, and it is the reason a business book with no recorded review dates is a bigger exposure than a consumer book of the same size.
Questions people ask about know your business
What does KYB stand for?
Know your business. It is the business-customer counterpart of know your customer, and in most firms it is the same policy with a different evidence set rather than a separate programme.
Is KYB legally required, or is it just a term vendors use?
The term is industry usage. The underlying obligations are not: rules on identifying legal entity customers and their beneficial owners are what KYB describes, and those are written down. Whether and how they apply to your firm is a question for your policy and your counsel, not for a software page.
Do we need to identify every owner?
You need to identify each individual at or above the ownership threshold, and at least one person who controls the company, such as a senior officer. Your own policy may go further, and for higher-risk customers it usually should.