When compliance and risk leaders talk about onboarding processes, it's common for Know Your Customer (KYC) and Know Your Business (KYB) to be discussed as if they were two sides of the same coin. But conflating these two verification processes can expose banks to potential fraud, regulatory penalties, and operational inefficiencies. Here's why banks needs a dedicated approach to business verification.
KYB and KYC: Complementary, but not the same
Know Your Customer (KYC) practices have long been the foundation for verifying individuals. These processes rely on government-issued IDs, individual credit reports, and personal transaction histories. But applying these personal verification steps to business customers can leave significant gaps in authentication. Businesses, unlike individuals, have complex ownership structures, fluid risk profiles, and a network of public and private records that require specialized handling.
KYB requires verification through entity-specific documents such as articles of incorporation, beneficial ownership data, Uniform Commercial Code (UCC) filings, and Secretary of State (SOS) filings. A robust KYB process also incorporates continuous monitoring of web presence, regulatory changes, and lien activity — elements that don't exist in traditional KYC workflows.
The risks of treating KYB like KYC
When banks shoehorn KYB into a KYC process, they expose themselves to several risks:
- Missed shell companies and synthetic identities: Shell companies are notoriously challenging to detect. According to the Liminal Link Index 2025, 77% of organizations struggle to identify shell companies linked to sanctioned entities. Without dedicated KYB procedures, fraudulent entities slip through the cracks.
- Overreliance on static data: Businesses change frequently. Static KYC-style verification, which relies on point-in-time documents, quickly becomes outdated. KYB demands real-time updates and continuous data validation to reflect ongoing entity-level changes.
- Operational bottlenecks: Applying KYC processes to business customers generates false positives, causing redundant reviews and operational slowdowns. This is particularly frustrating for product managers looking to streamline onboarding.
- Regulatory and audit gaps: Compliance audits require detailed and current records. A KYC approach misses the complexity of regulatory obligations around beneficial ownership, sanctions screening, and perpetual compliance monitoring.
From risk to product to compliance, internal banking teams can’t afford to rely on KYC for verifying new business customers.
Why holistic, authoritative data matters
A dedicated KYB strategy starts with trusted data sources that paint a complete picture of each business customer. Business verification demands access to high-quality, real-time data from Secretary of State offices, IRS databases, UCC records, and alternative sources.
For instance, correctly identifying Ultimate Beneficial Owners (UBOs) — critical for compliance — requires deep visibility into corporate hierarchies and beneficial ownership registries. Yet, the Liminal Link Index notes that 82% of institutions lack advanced models or internal expertise to spot synthetic identities among UBOs.
Authoritative data and tailored workflows solve this problem, providing continuous verification and robust risk assessments built specifically for businesses.
From verification at onboarding to perpetual KYB
More and more compliance leaders are also evolving their KYB programs with perpetual KYB (pKYB), mirroring the shift seen in individual verification with perpetual KYC (pKYC). This continuous verification model recognizes that entity risk doesn't end at onboarding.
At any point in the lifecycle of a business customer, things can change. New liens, abrupt ownership restructuring, or sudden alterations in business behavior can quickly escalate risk profiles and require the attention of your risk team. Perpetual KYB identifies these signals proactively, mitigating risks before they become critical and reducing unnecessary manual reviews by elevating only the most relevant changes.
What does a dedicated KYB program look like?
Implementing a robust KYB program means focusing on some key principles:
- Real-time entity data and API-first architecture: Integrating directly with authoritative sources via APIs ensures accuracy and timeliness.
- Continuous monitoring and dynamic risk scoring: Adjusting risk assessments based on ongoing data rather than static information ensures agility and compliance.
- Unified business profiles: Sharing consistent data across risk, compliance, and product teams removes silos and reduces inefficiencies to streamline decision-making.
Notably, 53% of organizations are consolidating their business entity verification stacks precisely to achieve these outcomes, according to the Liminal Link Index 2025.
Dedicated KYB is essential
Banks that treat KYB as an extension of KYC are overlooking critical differences in verification and opening their businesses up to unnecessary risks. A dedicated, full-lifecycle KYB strategy is the only way to reduce fraud exposure, strengthen audit readiness, and accelerate business onboarding.
By moving beyond only KYC and investing in purpose-built KYB programs, banks can protect themselves against financial crime while also keeping onboarding experiences smooth for new business customers. Focusing on your KYB process isn’t just about preventing fraud — it’s about keeping your bank on a path of sustainable growth.
See what the best BEV programs do differently
Want to dive deeper into best-in-class KYB practices? Download the Liminal Link Index 2025 for this year's comprehensive report.
