Glossary KYB

KYB explained simply

Digital business models rely on speed and trust – even in the B2B sector. Simply identifying individual customers is no longer enough. When onboarding business clients, you must verify their identity, ownership structure, and risk profile. This is precisely where KYB (short for 'Know Your Business') comes in.

The KYB process protects against money laundering, fraud, and reputational damage, and is required by law in many countries. However, traditional KYB processes are often manual, time-consuming, and prone to error. Media disruptions and a lack of system integration further hinder efficient implementation. This article demonstrates how digital identity solutions can make KYB secure, fast, and scalable.

What is KYB?

Know Your Business (KYB) is a process for digitally verifying the identity of companies. The goal is to verify business partners in compliance with legal standards by analyzing ownership structures, ultimate beneficial owners (UBOs), and potential risks. The KYB process is an integral part of regulatory requirements such as the EU Anti-Money Laundering Directive (AMLD), the Anti-Money Laundering Act (AMLA) in Germany, the FM-GwG in Austria, or the Anti-Money Laundering Act (AMLA) in Switzerland.

Unlike KYC (Know Your Customer), which focuses directly on identifying end customers, KYB primarily targets legal entities such as companies and organizations, both nationally and internationally. A key component of the KYB process is identifying the underlying ultimate beneficial owners (UBOs) – the natural persons who exercise control or influence.

Who is subject to KYB requirements?

KYB is relevant for all businesses that enter into relationships with other companies, particularly in regulated sectors. These include, among others:

• FinTechs and neobanks that provide business accounts
• Payment service providers that onboard business clients
• Insurers and underwriters that issue commercial policies
• Crypto platforms subject to AMLD or MiCA regulations
• Leasing and factoring providers targeting B2B customers
• B2B platforms that facilitate registrations or transactions between companies

In practice, KYB also applies to anyone entering into a business relationship with potentially high-risk companies – such as those based in high-risk countries (e.g. Iran, Russia, or North Korea) or those with complex ownership structures.

How the KYB process works

A complete KYB process comprises several stages that together form the company's risk profile:

• Company identification: Cross-referencing official registers to verify the name, registered office, legal form, and status
• Identification of ultimate beneficial owners (UBOs): Determining who holds shares or controls the company, directly or indirectly
• Risk assessment and sanctions screening: Checking against PEP and AML lists, as well as evaluating political or geographical risks
• Documentation and auditability: Audit-proof archiving of all verification steps
• Ongoing monitoring: Updating records when changes occur (e.g., changes in UBOs or company name)

Depending on the company structure, this process can be simple or highly complex – particularly with multi-layered corporate structures or international entities.

Challenges in practice

In practice, implementing KYB checks presents companies with a variety of organizational, technical, and legal challenges. The following hurdles frequently arise, particularly in international contexts and fast-growing business models:

1. Complex ownership structures and cross-border entities

Identifying ultimate beneficial owners (UBOs) can quickly become complex, particularly with holding companies, investment firms, or foreign registered offices. Multi-tiered ownership structures, trusts, and shell companies hinder transparency. Manual UBO research is time-consuming and carries a high risk of error.

2. Media disruptions and a lack of system integration

Many companies still rely on paper-based or hybrid processes, such as handling KYB applications via email, maintaining manual lists, and lacking centralized documentation. A lack of interfaces with commercial registers, CRM systems, or sanctions databases leads to delays, redundancies, and inefficiencies.

3. Country-specific legal requirements

Regulatory frameworks differ not only between EU member states, but also compared to non-EU countries such as Switzerland:

• In Germany, the Anti-Money Laundering Act (AMLA) imposes specific obligations for identifying, documenting, and continuously monitoring UBOs. Efficient AMLA compliance checks enable companies to design processes that are legally compliant yet customer-friendly.
• In Austria, the Financial Markets Anti-Money Laundering Act (FM-GwG) governs KYB requirements for credit and financial institutions.
• In Switzerland, the Anti-Money Laundering Act (AMLA) applies. It obliges financial intermediaries to clarify the identity of contractual partners and controlling persons – though partly with different thresholds and definitions compared to the EU.

International companies with subsidiaries or a cross-border client base must therefore navigate country-specific differences in the KYB process, adding further complexity.

4. Time commitment and resource strain

Manual KYB checks often take several days or even weeks – particularly when data is missing or follow-ups with clients are needed. For compliance teams, this leads to extensive research, time-consuming inquiries, and burdensome documentation. At the same time, the customer experience suffers, potentially lowering onboarding conversion rates.

5. Data protection, transparency, and auditability 

Particularly when handling personal data of ultimate beneficial owners, compliance with data protection regulations such as the GDPR (EU) or FADP (Switzerland) is essential. At the same time, regulatory authorities demand transparent documentation and complete traceability of all verification steps. Without automated and audit-proof systems, striking this balance is nearly impossible.

Benefits of automated KYB solutions

With modern identification solutions like PXL Ident, the first crucial part of the KYB process, identity verification, can be fully automated. Combining efficient CRM integrations (e.g., Salesforce), connections to relevant APIs, and further detailed checks enables a fully digital, automated KYB process that is legally compliant, fast, and scalable.

Key benefits of an automated KYB process:

• Automatic data retrieval from commercial registers
• Digital UBO identification, even within complex ownership structures
• Accelerated onboarding processes – ideal for FinTechs and B2B platforms
• Audit-proof documentation for internal and external audits
• Seamless data integration into CRM systems

A clear example of this implementation is the case study with SwiPay, a FinTech that implemented KYB and digital signatures in under 48 hours.

The KYC process for businesses

The KYC process is relevant for businesses, for example, when they wish to open a business account. Before doing so, they must complete several KYC-compliant steps and provide certain information for the verification process. This includes data about the company, along with a video verification of its legal representative. In the final step, the company itself is verified.

Company information
When opening an account and completing the associated KYC process, you will first be asked to provide information about your company. This includes details such as the legal form, company name, industry sector, commercial register number, intended use of the bank account, number of employees, current business address, etc.

You will also likely be asked to provide your VAT identification number (VAT ID) at this stage. However, this is often not mandatory, as some companies set up their business account prior to tax registration and have 90 days following account creation to submit their tax details. It is equally important to note that certain legal entities may require numerous additional documents. These can include the certificate of incorporation, a list of beneficial owners, an extract from the commercial register, or financial statements.

Details of the company's legal representatives
The next step is relevant for the legal representatives of your company, who are also referred to as UBOs (Ultimate Beneficial Owners). Any shareholder holding at least 25 per cent must provide the following details for the KYC process: first name and surname, email address, telephone number, nationality, date, place and country of birth, current address, and tax identification number.

Video verification of the legal representative
The next step serves to uniquely verify the legal representatives of the company. This is carried out via a video call. Please have your identity card to hand.

Verification of the company
By providing the required data and documents, nothing stands in the way of verifying the company and opening the desired business account. The prerequisite for this is that all legal representatives of the company have passed the video verification and submitted all mandatory documents in a suitable manner.

Company verification as a competitive advantage

KYB is far more than a compliance requirement. It is a decisive factor for trust, efficiency, and growth in digital B2B. Those who approach KYB strategically and implement it through automation not only reduce risks, but also lay the foundation for seamless business relationships.

Scalable KYB processes allow companies to tap into new customer segments more quickly – whether in FinTech, e-commerce, or the platform economy.