Know Your Business (KYB)
Know Your Business (KYB) is the verification of companies as business partners: their existence, owners, beneficial owners and persons authorized to represent them.
KYB is the counterpart of KYC for companies. Financial institutions and other obliged entities check, among other things, the commercial register entry, controlling persons and signing authorities under the rules against money laundering. In Switzerland, this is governed by the Anti-Money Laundering Act, in the EU by the anti-money laundering directives and the new anti-money laundering regulation.
With companies' agents, an additional question arises: not only whether the company is known, but whether its agent is authorized for a specific action on the company's behalf. That is the question of KYA.
Example
A bank has verified a company under KYB: commercial register, controlling persons, authorized signatories. Now the company sends an agent that wants to trigger payments. The bank knows who the company is, but only a mandate shows what this agent may do.
How it differs
KYC verifies people, KYB companies, KYA the individual action of an agent. The three build on each other: without a known principal, a mandate is worth little.
In practice
- Verify companies under KYB as before, before admitting agents on their behalf.
- For actions by a company's agents, additionally require a mandate with limits.
- Check whether the mandate comes from a person with signing authority.
Role in KYA
KYA neither requires nor replaces KYB. It checks whether an agent was authorized for a specific action; whether the principal itself has been verified as a business partner remains a matter for KYB.
A term from the flow, not a check of its own. To the method
Frequently asked questions
What is Know Your Business?
The verification of companies as business partners, such as the commercial register entry, owners, beneficial owners and persons authorized to represent them.
What is the difference between KYB and KYC?
KYC verifies natural persons, KYB companies. Both are part of the due diligence obligations against money laundering.
What is the difference between KYB and KYA?
KYB checks who a company is. KYA checks whether an agent of this company was allowed to carry out a specific action.
Does KYA replace company verification?
No. KYA complements it with the question of authority for individual actions by agents.
Who must carry out KYB?
Above all financial institutions and other obliged entities under anti-money laundering rules. Many companies also verify business partners voluntarily.
General information, not legal advice. The statutes and the circumstances of each case are decisive.