Know Your Business KYB

No. KYB is a market term. The phrase "know your business" does not appear in the Anti-Money Laundering Regulation (AMLR). The regulation has one duty, customer due diligence, and it applies whether the customer is a person or a legal entity. KYB is the name the market gives that duty when the customer is a legal entity.

The separate name exists because the work is different. A person can show a passport. A company cannot. Its identity sits in a register and in its founding documents. Behind it stand people: those who represent it and those who own or control it. A KYB check has to reach each of them.

Article 22(1)(b) of the AMLR sets the minimum for a legal entity: its legal form and name, its registered office and principal place of business, its country of creation, its legal representatives and, where available, its registration number, tax identification number and Legal Entity Identifier. The same list is set out under know your customer. The list also covers nominees. The firm must record the names of anyone who holds shares or a directorship in nominee form, with their status as a nominee.

Identification data is only part of the file. Under Article 20(1) the firm also assesses the nature of the customer's business, which for an undertaking includes whether it carries out activities.

Article 22(6) is written for all customers and gives the two routes described under know your customer: identity documents supported by reliable and independent sources, or electronic identification means at assurance level substantial or high and relevant qualified trust services under the eIDAS Regulation. A company has no passport, so the document route rests for it on the "equivalent" that Article 22(6)(a) allows and on those sources.

The regulation does not name the documents that count for a company. In practice firms rely on an extract from the business register and on the company's constitutional documents. What a register records depends on national law. Article 28 required the EU authority AMLA to submit to the Commission, by 10 July 2026, draft technical standards on the reliable and independent sources that may be used for natural and legal persons. Such standards bind firms only once the Commission adopts them.

One document is required by name. When a firm enters a new business relationship with a legal entity that has to register its beneficial owners, Article 23(4) requires it to collect valid proof of registration, or a recently issued excerpt of the register confirming that the registration is valid. As a rule, verification is finished before the relationship starts (Article 23(1)).

The firm identifies every beneficial owner and takes reasonable measures to verify who they are, so that it is satisfied that it knows them and understands the customer's ownership and control structure (Article 20(1)(b)). The rules on who counts as an ultimate beneficial owner, on ownership through a chain of companies and on verification apply to every KYB check, including the duty to consult the central register that each member state keeps under Article 10 of Directive (EU) 2024/1640.

A layered structure has to be written down. Where the structure contains more than one entity, Article 62(1) requires the beneficial ownership information to include a description of it: the entities in the structure, the relationships between them and the share of the interest held.

The firm must verify that any person who claims to act for the customer is authorised to do so, and it must identify that person and verify their identity. That is Article 20(1)(i). A company always acts through people, so this measure applies in every KYB check. The person is identified and verified in the same way as a customer who is a natural person (Article 22).

The regulation does not say what proves authority. That comes from national company law. For a director, firms usually look to the business register. For anyone else they usually ask for a document that traces back to the company, such as a board resolution or a power of attorney. Check the rules of the country where the company is registered.

Doubt reopens the question. Under Article 19(1), a firm must apply customer due diligence whenever it doubts that the person it is dealing with is the customer or someone authorised to act for the customer.

A KYB check screens the people behind the company as well as the company itself. For a legal entity, Article 20(1)(d) requires the firm to check whether persons subject to targeted financial sanctions control the entity, or hold more than 50% of its proprietary rights or a majority interest in it, individually or collectively. Under Article 20(1)(g) the firm determines whether a beneficial owner is a politically exposed person.

Some features of a company raise the risk. Annex III lists them as factors of potentially higher risk. They include nominee shareholders or shares in bearer form, a cash-intensive business, an ownership structure that appears unusual or excessively complex for the company's business, and an entity created in a jurisdiction where it has no real economic activity. Where the firm identifies a higher risk, enhanced due diligence applies.