KYC or KYB: where is the line?

KYC covers natural persons, KYB covers legal entities. KYB always contains a KYC step, because the point of it is to reach the people who own or control the company and verify them.

What documents do we need for KYB?

Usually a current registry extract or certificate of incorporation, the articles or statutes, evidence of ownership such as a shareholder register or beneficial-ownership filing, identification of directors and controllers, and proof of the business address and activity.

How deep does the ownership chain have to go?

To the natural persons who ultimately own or control the entity. Where it cannot be resolved, record how far you got, which sources you used and why it stopped, so a reviewer can judge the residual risk instead of guessing at it.

SCREENING GLOSSARY · GUIDEUPDATED 2026-09-04

Screening Glossary

What is KYB (Know Your Business)?

A company is a legal fiction that can be assembled in a day and dissolved quietly. KYB is due diligence on that fiction: verify the registration, identify the directors and beneficial owners, understand the activity, and screen the entity and the people behind it.

Verifying an entity means reading the registry extract, mapping ownership up to natural persons, and testing whether the stated business matches observable reality. In sanctions terms this is unavoidable. Ownership rules such as OFAC's 50 percent rule mean an entity can be blocked without ever appearing on a list, and the only way to detect that is to resolve who owns it.

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What this workflow covers

SCOPE

Confirm legal name, registration number and status from the registry record.
Resolve the ownership chain to natural persons, then screen every party the chain produced.
A supplier with no name-screening hit can still be blocked through a 55 percent shareholder whose own owner is designated.
Our KYB and UBO discovery maps owners and officers, and a Deep Research report carries a source URL for each entity and each relationship and reports contradictions between sources instead of smoothing them over.
The registry extract proves registration. It does not establish who ultimately benefits.

Compliance glossary

TERMS

Shell company: A registered entity with no meaningful operations or assets, often used to hold assets or to obscure the identity of the person behind a transaction.
Front company: An operating business used to disguise the involvement of a sanctioned or criminal party in trade or payments.
Registry extract: The official record of a company held by a national commercial register, showing name, number, status, officers and often shareholders.

Authoritative references

SOURCES

01
The FATF Recommendations — Recommendations 10 and 24 (beneficial ownership of legal persons)
Financial Action Task Force
02
Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked
U.S. Department of the Treasury — OFAC

Frequently asked questions

Q&A

KYC or KYB: where is the line?: KYC covers natural persons, KYB covers legal entities. KYB always contains a KYC step, because the point of it is to reach the people who own or control the company and verify them.
What documents do we need for KYB?: Usually a current registry extract or certificate of incorporation, the articles or statutes, evidence of ownership such as a shareholder register or beneficial-ownership filing, identification of directors and controllers, and proof of the business address and activity.
How deep does the ownership chain have to go?: To the natural persons who ultimately own or control the entity. Where it cannot be resolved, record how far you got, which sources you used and why it stopped, so a reviewer can judge the residual risk instead of guessing at it.

Screening Glossary Ultimate beneficial owner OFAC 50 percent rule KYC KYB verification Customer screening Sanctions screening