The terms KYC and KYB are used in the financial and business environment to comply with applicable legal and regulatory obligations.
KYC (Know Your Customer)
KYC, or “Know Your Customer”, is a process through 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 and verification of identifying information, such as official documents and proof of address, in order to comply with applicable regulations. This process enables organisations to assess certain regulatory risks and to fulfil the corresponding legal obligations.
KYB (Know Your Business)
KYB, or “Know Your Business”, is a process similar to KYC, but focused on the verification of legal entities (companies) rather than individuals. This procedure involves validating the legal existence of a company, its corporate structure, its ultimate beneficial owners (UBOs), and the assessment of potential associated risks. The objective of KYB is to verify the relevant corporate information of the entities with which a relationship is established, in accordance with applicable regulations.
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.
KYB: Focuses on the verification of business entities, including the identification of their owners and an understanding of their structure and operations.
Both processes are essential to mitigate regulatory risks and to comply with applicable regulations relating to the prevention of financial crime.