The terms KYC and KYB are fundamental in the financial and business world to guarantee secure operations that comply with current regulations.
KYC (Know Your Customer)
KYC, or ‘Know Your Customer’, is a process by which companies verify the identity of their individual customers. This procedure is essential to prevent illicit activities such as money laundering, terrorist financing and fraud. Common KYC practices include the collection of personal information, such as identification documents, proof of address and assessment of the client's financial situation. This process allows organisations to assess the risk associated with each client and ensure compliance with relevant regulations.
KYB (Know Your Business)
KYB, or ‘Know Your Business’, is a process similar to KYC, but focused on the verification of legal persons (companies) rather than individuals. This procedure involves validating the legal existence of a company, its corporate structure, the ultimate beneficial owners (UBOs) and the assessment of possible associated risks. The objective of KYB is to guarantee that the companies with which commercial relationships are established operate legitimately and comply with regulations against money laundering and other illicit activities.
Key differences between KYC and KYB
The main difference between KYC and KYB lies in the subject of verification:
KYC: Focuses on the identification and verification of individual customers.
Know Your Business: Focuses on the verification of commercial entities, including the identification of their owners and an understanding of their structure and operations.
Both processes are essential to mitigate financial and reputational risks, and to ensure compliance with international regulations on the prevention of financial crime.