The KYB verification process is the set of checks a regulated firm runs to confirm that a corporate customer is real, lawfully constituted, and controlled by identifiable people.. The KYB verification process establishes who owns and directs a company before it is allowed to transact, which is what stops shell entities and front companies from slipping into the financial system. This article covers what KYB is, why it matters, the steps involved, how it differs from KYC, and where automation earns its place.
What the KYB Verification Process Means
The KYB verification process applies the same logic as individual customer checks, but to legal entities.. A bank onboarding a limited company cannot simply take a registration number at face value. It needs to know the company exists, what it does, and crucially the natural persons who ultimately own or control it.
The reason is money laundering. The United Nations Office on Drugs and Crime estimates that 2 to 5 per cent of global GDP, somewhere between USD 800 billion and USD 2 trillion, is laundered each year. Corporate structures are a favoured tool because layered ownership hides the individuals behind the money. KYB exists to pierce that layering.
The KYB Verification Process, Step by Step
A sound KYB verification process moves through four stages.
- Entity verification.Confirmthe business is genuine and active. This means checking incorporation details, registration number, legal form, registered address and trading status against company registries and official records. Dissolved, suspended or fictitious entities are caught here.
- Ultimate beneficial owner identification.Identifythe natural persons behind the company. Under FATF Recommendation 10 and EU anti-money laundering rules, the standard threshold is anyone holding 25 per cent or more of ownership or voting rights. Control can also exist below that line through board appointment rights, veto powers or shareholder agreements, so ownership percentage alone is not the full test. Once identified, each beneficial owner is verified as an individual, which is where KYB connects to KYC software.
- Screening.Check the entity and its owners and directors against sanctions lists, politically exposed person data and adverse media. Thisdetermines whether the relationship carries elevated risk before any account is opened.
- Risk scoring and ongoing monitoring.Assign a risk rating based on industry,jurisdiction, ownership complexity and screening results, then keep watching. Ownership changes, new sanctions designations and negative news can all shift risk after onboarding, so KYB is not a one-time gate.
Why KYB matters more under the new rules
Beneficial ownership rules are tightening. In the European Union, the single anti-money laundering rulebook centred on the Anti-Money Laundering Regulation applies from 10 July 2027, and the new Authority for Anti-Money Laundering, which became operational on 1 July 2025, will supervise it. The regulation keeps the 25 per cent beneficial ownership threshold but allows the European Commission to set a lower figure, capped at 15 per cent, for categories of entities exposed to higher risk after an assessment due by 10 July 2029.
The direction is clear. Firms are expected to look harder at ownership, document how they reached their conclusions, and refresh those conclusions over time. A KYB verification process built only for onboarding will struggle to meet that standard.
| Aspect | KYC | KYB |
|---|---|---|
| Subject | An individual customer | A legal entity |
| Core question | Is this person who they claim? | Is this business real and who controls it? |
| Key data | ID document, biometrics, address | Registry filings, ownership structure, UBOs |
| Added complexity | Single identity | Layered ownership, multiple directors |
| Screening | Sanctions, PEP, adverse media on the person | The same, applied to the entity and each owner |
The two are not alternatives. KYB almost always contains KYC, because verifying a business means verifying the people who own and run it.
How Automation Improves the KYB Verification Process
A manual KYB verification process is slow, especially when analysts must collect registry documents and map ownership across jurisdictions. An analyst pulling registry documents across jurisdictions, mapping ownership by hand and rechecking sanctions lists can take days for a single complex entity. Automation changes the economics:
- Registry connectivity retrieves and parses corporate filings across multiple countries automatically.
- Ownership mapping builds the structure and flags the individuals who cross the beneficial ownership threshold.
- Continuous screening rechecks entities and owners against updated lists rather than only at onboarding.
- Orchestration routes straightforward cases through automatically and escalates complex or high-risk ones to human review.
Automation does not remove judgement. It removes the repetitive collection work so analysts spend their time on the cases that actually need it. Firms increasingly pair this with AI-assisted risk scoring and connect KYB into their wider AML controls.
Where Artha Fits in the KYB Verification Process
Artha Fintech supports the KYB verification process with configurable KYB and KYC modules covering entity verification, beneficial ownership mapping, screening, and ongoing monitoring through one integration.. Artha supplies the software and orchestration; regulated decisions and any licensed obligations rest with the client or its regulated infrastructure partners. Explore the KYC and KYB module.
Frequently asked questions
Is KYB legally required?
For regulated firms, yes. Anti-money laundering law requires customer due diligence on business customers, including identifying and verifying beneficial owners. The exact obligations depend on the jurisdiction and the firm’s licence.
What is a UBO?
An ultimate beneficial owner is the natural person who ultimately owns or controls a company, typically at or above a 25 per cent ownership or voting threshold, or through other forms of control.
How often should KYB be refreshed?
On a risk-based schedule and whenever a trigger occurs, such as a change in ownership, a new sanctions listing or adverse media. Higher-risk customers are reviewed more frequently.
Can KYB be fully automated?
Data collection, ownership mapping, and screening in the KYB verification process can be largely automated.. Final decisions on complex or high-risk entities usually keep a human in the loop.
