KYB (Know Your Business)
Know Your Business (KYB) is the compliance process of verifying the identity, ownership structure, and legitimacy of a business customer before onboarding them onto a financial platform.
KYB is required for any embedded finance program that onboards business customers — which includes virtually all B2B payment platforms, AP automation companies, and business banking programs. KYB requirements come from BSA/AML regulations and sponsor bank requirements.
KYB typically requires: legal entity verification (registered name, EIN, state of incorporation), beneficial ownership identification (individuals owning 25%+), business address and operating history verification, and sanctions screening against OFAC and other lists.
KYB in embedded finance: the platform is responsible for collecting and verifying KYB information, but the sponsor bank sets the standards and performs oversight review. Banks vary significantly in their KYB requirements — some require robust automated systems; others accept manual review for low-risk programs.
KYB automation: a growing ecosystem of KYB providers (Alloy, Middesk, Persona) offer automated business verification through APIs. Integrating KYB automation early is important — manual KYB review doesn't scale past a few hundred onboardings per month without significant staff investment.