For US banks, KYB became a duty in three steps:
- 11 May 2016. FinCEN's final Customer Due Diligence Rule (81 FR 29398) said covered financial institutions were "not presently required" to know who owns or controls their legal entity customers.
- 11 May 2018. Banks had to identify each owner at 25 percent or more plus one controller (31 CFR 1010.230) and understand the nature and purpose of each customer relationship (31 CFR 1020.210).
- 13 February 2026. A FinCEN order let banks take those owners at a customer's first account, then only on doubt about the data or when risk based procedures call for it.
FATF Recommendation 10 sets the same parts as the international standard, and KYB and UBO verification carries them out, from registry extract to last natural owner.
What is know your business (KYB), and is it a legal term?
KYB stands for know your business. In AML and banking it means customer due diligence on a company, partnership, foundation or trust. It is not a legal term: the rule texts say customer due diligence, and India's central bank files the work under its Know Your Customer Directions.
For a legal person or arrangement, the FATF Recommendations say financial institutions should be required to "identify and verify the identity of the customer, and understand the nature of its business, and its ownership and control structure" (Interpretive Note to Recommendation 10, para 5). A two member LLC, a partnership and a family trust all qualify.
What does a KYB program contain?
Seven parts, each tied to its FATF rule.
Table 1. KYB program parts, what each file shows and one illustrative file (FATF Recommendations, June 2026 text)
| Part | What the file must show | The illustrative LLC's file | FATF rule |
|---|---|---|---|
| 1. Identify and verify the business | The company exists, is active and who can bind it | Name, principal place of business, taxpayer identification number | R10(a); INR.10 para 5 |
| 2. Owners and controllers | Each natural person who owns or controls it | Both members, each at 25 percent or more, and the manager | R10(b); INR.10 para 5 |
| 3. Purpose and nature | What the business does, why the account exists, what activity to expect | Restaurant equipment sales, monthly wires to suppliers in Italy | R10(c); INR.10 para 5 |
| 4. Risk assessment and risk scoring | A rating and the depth it sets for the other parts | A rating that sets how far rows 5 and 6 go | R1; R10 |
| 5. Screening | Sanctions, PEP and adverse media checks on the company, its officers and owners | The LLC, both members and the manager | R6, R7; R12 |
| 6. Ongoing due diligence | Activity still matches the file | Reopened when a wire goes to a new country or a member sells a stake | R10(d) |
| 7. Records | What was known and when, refusals included | Kept after the account closes | R11; AMLR Art 77(3) |
Picture a US bank (illustrative) opening an account for an LLC that sells restaurant equipment, owned 60 and 40 percent by two members; the third column is its file.
Where do KYB verification and the KYB process fit?
KYB verification, also called a KYB check, settles rows 1, 2 and 5 from sources independent of the customer: registry data, officer and owner records, screening results. The KYB process is the order the parts run in: rows 1 to 5 before the account opens, row 6 while it lasts, row 7 after it ends.
Which rules require KYB?
Each rulebook writes the requirements as customer due diligence:
- FATF. Recommendation 10 and its note set the measures. Recommendations 24 and 25 make countries keep company and trust owner data within the authorities' reach.
- EU today. Directive (EU) 2015/849, Arts 11 and 13. The 6AMLD (Directive (EU) 2018/1673) defines criminal offenses and sets no customer checks.
- EU from 10 July 2027. Regulation (EU) 2024/1624 (AMLR) Art 20(1): nine measures, the customer's business among them; Art 22(1)(b): entity data, a Legal Entity Identifier where available, nominees.
- UK. MLR 2017 reg 28: a company's name, number, office, constitution, board and owners; reg 30A: register excerpts and discrepancy reports.
- US. 31 CFR 1020.220 for the entity's name, address and taxpayer number; 31 CFR 1010.230 for a legal entity customer's owners and one controller.
- India. The RBI's Directions for commercial banks (updated 1 October 2026): a company's documents (para 33), owners above 10 percent (para 5(1)(iv)), entity records opened since 1 April 2021 uploaded to the Central KYC Records Registry (para 65(6)).
- Singapore. MAS Notice 626 (last revised 30 June 2025): a legal person's form, existence, constitution and powers (para 6.9) and its owners (para 6.14).
What did 2026 bring to KYB rules?
Besides the February FinCEN order:
- 31 March and 1 July, Australia. Act No. 110 of 2024 rewrote due diligence in the AML/CTF Act 2006 from 31 March. Real estate, dealers in precious metals and stones and professional services took on its duties on 1 July (Schedule 3, item 11).
- 14 August, US. FinCEN's final rule took US person owners out of company ownership reporting. Covered financial institutions keep their "continuing obligation" of due diligence under the 2016 rule.
- 30 September, EU. AMLR Art 28(1) has AMLA draft customer due diligence standards. Its final report on them, published that day, is to be submitted to the European Commission for adoption.
- UK, end of 2026 at the earliest. Companies House expects to complete identity verification of existing directors and PSCs, and for new appointments it has been compulsory since 18 November 2025.
Who has to run KYB, and which customers count as businesses?
The FCA fined Nationwide Building Society £44,078,500 in a Final Notice of 11 December 2025. Its controls for personal current accounts "were not set up for business use", and it had not gathered businesses' activities and "expected account usage" (para 2.10). Furlough payments, "a strong indicator of business use", reached 5,191 personal accounts: 33,678 payments worth £64.6 million (para 2.16).
Banks, lenders and payments firms run KYB under FATF Recommendation 10, virtual asset service providers under Recommendation 15, and lawyers, accountants, trust and company service providers and other designated non-financial businesses and professions under Recommendation 22, for the activities it lists.
KYB starts with what the customer does, not the account product. A US sole proprietorship is no legal entity customer: only entities formed by a public filing, general partnerships and their foreign equivalents are (31 CFR 1010.230(e)(1)). So no owner certification is taken. The file still needs what the business does and how it will use the account, both missing at Nationwide.
What does KYB compliance require beyond the checks?
KYB compliance is the program around the checks, set by the note to FATF Recommendation 18 and, for US banks, 31 CFR 1020.210(a)(2):
- Policies and procedures that fix the depth for each customer type.
- The firm's own risk assessment, documented (note to Recommendation 1, para 12).
- A compliance officer at management level, the MLRO in a UK firm.
- Training for onboarding and monitoring staff.
- Independent testing, internal or external.
- Records and audit trails for at least five years after the relationship ends (Recommendation 11; MLR 2017 reg 40), and in the EU from 10 July 2027 after a refusal too (AMLR Art 77(3)).
In the US, an owner's verification record may go five years after it was made. The identifying record stays five years after the account closes (31 CFR 1010.230(i)(2)).
What can software do in a KYB program?
Automated KYB pulls registry data, maps owners layer by layer and rescreens names when lists change. Manual KYB does the same by hand. Bought as KYB solutions or business verification services, the software runs on the firm's policy. A person decides whether a file passes. complead, formerly Sanction Scanner, can verify a company and its owners in one API call: it follows ownership until natural persons are reached, screens every beneficial owner and dates each record.
What are the key differences between KYB and KYC?
KYC, short for know your customer, proves that a person is who they claim to be. KYC verification does it with a document, independent data or electronic identification. KYB proves the entity, then runs KYC on the officers and owners it finds, so the LLC's members and manager each get the person checks.
Where should a KYB program start?
Start in the written policy, by type of business customer: how deep each of the seven parts goes, from simplified measures to enhanced due diligence, and which events reopen a file before its review date. A furlough payment landing in a personal account is one such event.
Related terms
- KYB verification. The step that proves, from sources the customer does not control, that a business exists and who runs and owns it, then screens them all.
- Ultimate beneficial owner. The person row 2 of the program has to name.
- Customer due diligence. The four measures of FATF Recommendation 10 for every customer, of which KYB is the business version.
- Ongoing monitoring. Review of a customer's file and activity until the relationship ends.
- KYB onboarding. The onboarding flow for a business customer, from application to first transaction.
- Know your customer (KYC). The identity and due diligence work a firm does on each customer, the parent program of KYB.
How this entry was checked. Searched on 28 October 2026 for "KYB" and "know your business", with no hit in any: MAS Notice 626, the RBI's Directions, 31 CFR Parts 1010 and 1020, the UK Money Laundering Regulations 2017, Regulation (EU) 2024/1624, Directive (EU) 2015/849 and the FATF Recommendations (June 2026). Melis Alparslan, Regional Sales Manager at complead, is the author; Ufuk Gürdaş, Compliance Specialist, sets every rule and date here against its source before the entry goes live. Last reviewed: 29 October 2026. Also opened at source that day: Directive (EU) 2018/1673, the Companies House transition plan, AMLA's final report of 30 September 2026, FinCEN's 2016 rule, February 2026 order and August 2026 rule, Australia's AML/CTF Act 2006 with its 2024 amending Act, and the FCA's Nationwide notice. The definition follows FATF's note to Recommendation 10; the LLC is illustrative.
