KYB and KYC are often used interchangeably but there are differences
Do you need to perform a KYB or KYC? While the two terms are often used interchangeably, there are a couple of differences.
Know your business (KYB) and know your customer (KYC) both work to verify a company’s credentials. In other words, the processes verify that a business is legitimate and not part of a criminal enterprise.
In most countries, performing a KYB is also a legal requirement to prevent money laundering, along with other types of financial crimes.
A know your customer check also verifies a business’s legitimacy. The primary difference is the age of the two regulations. KYC procedures have been around for several decades, while KYB standards are relatively new. In other words, KYB is the updated version of KYC.
Does Your Organization Need to Perform a KYB
You don’t need to perform a know your business check on every company or vendor you merge or partner with. For example, you can probably skip the process with a floral shop but check with local laws. These laws vary by country.
What businesses are you legally required to verify? The list is extensive but most are in the financial industry. For example, you must perform a KYB on the following types of companies.
- credit institutions
- financial institutions
- online banking
- auditors
- asset managers
- external accountants
- tax advisors
- cryptocurrency marketplaces
- notaries
- trusts
- estate agents
- gambling services
If you want to ensure your business is protected from any potential litigation, it’s a good idea to perform a KYB on companies in non-regulated industries.
What Information Do You Get in a KYB Check
Whether you work with a service provider or perform the check yourself, be prepared to receive a lot of information about the company. Some of the data included in a KYB report typically includes the following.
- Basic company information: company name, registration code, VAT code, registration date, legal status, legal address, share capital, internet address, e-mail, phone, fax.
- Official beneficiaries: information about beneficiaries and the ultimate beneficial owners that comes directly from Business registries
- Calculated beneficiaries: information about beneficiaries that is calculated through the shareholders.
- Share Capital: complete or incomplete information about the authorized capital. It may contain the amount of authorized capital, capital status (paid/unpaid), and start date. This information helps to ensure the company you’re researching isn’t using funds to support illegal activities.
- Directorship: information about the relationships of persons (directors and shareholders) who are directors in other companies.
- Shareholders: complete or incomplete information about shareholders. This section may contain the name, registration code or date of birth, residence or location, amount, and percentage of shares, and start date.
- Managers: complete or incomplete information about all possible managers (such as members of the board, members of the supervisory board, etc.). This section may contain the managers’ role in the company, name, registration code or date of birth, residence, or location, and start date.
- Activity field: information about the company’s field of activity. This section contains the following information: classifier (such as NACE, SIC, OKVED, etc.), activity code, activity field in text, start date.
Your report may contain additional information, it often depends on the type and size of the business you’re researching.
