Questions

What is the difference between KYC and KYB?

Short answer

KYC (know your customer) checks that an individual is who they say they are. KYB (know your business) checks a company: that it exists and is registered, what it does, and who owns and controls it, which then means running KYC on those people too.

Last updated 2026-10-25

KYC: checking a person

For US banks, the customer identification program rule in 31 CFR 1020.220 sets the minimum: collect name, date of birth, address and an identification number before opening an account, and verify identity with risk-based procedures. Other regulated firms and other countries have similar rules.

In software that means identity document capture, liveness or selfie checks, database checks, sanctions and politically exposed person screening, and a review queue for the cases the automated checks cannot clear.

KYB: checking a business

For legal entity customers, US covered financial institutions must identify and verify beneficial owners under 31 CFR 1010.230. That means each person who owns 25 percent or more of the equity, plus one person with significant control, such as the CEO or CFO.

1Confirm the company in official registers: legal name, registration number, address and status.
2Collect the ownership structure, which can run through several layers of holding companies.
3Run KYC on each beneficial owner and the control person.
4Screen the company and the people against sanctions lists, and assess the business's risk from its industry and countries.
5Monitor for changes over time, not only at onboarding.

Tools

Check it for your case.

Sources

Read the official text.

31 CFR 1020.220, Customer identification programs for banks (eCFR)checked 2026-10-25
31 CFR 1010.230, Beneficial ownership requirements for legal entity customers (eCFR)checked 2026-10-25

Frequently asked

Common follow-up questions.

Does every fintech app need KYC?

Not every one. It depends on what the product does, which licences sit behind it and where it operates. Products that hold or move money usually do, often through a partner bank's or provider's programme.

Can we buy KYC and KYB instead of building them?

Usually yes, and most teams should. Identity and business verification vendors cover the checks; you build the onboarding flow, the review tools and the audit trail around them.

Why is KYB onboarding slower?

Ownership chains, missing registry data and documents that need a human to read them. Good tooling helps the reviewer, but some manual review is normal.

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