KYB explained to the company being checked
On the other side of the verification is a person trying to understand your company from documents. This article explains what they look for and how to make their job easy.
KYC — know your customer — is the verification of a person. KYB — know your business — is the verification of a company, and it is substantially more work, because a company can hide people behind layers of ownership.
If your company is going to contract with a bank, a payment provider, an institutional client or a fund, you will go through this. Understanding what the analyst is looking for saves weeks.
What is being verified
That the entity exists and is in good standing. Valid commercial registration, confirmed registered office, tax and social security position in order. Companies with suspended registration, an unverifiable address or debts under enforcement stop immediately.
Who controls the entity. Not the director: the beneficial owner, the natural person who ultimately owns or controls the company. In simple structures it is obvious. In structures with holding companies, foreign shareholders or cross-holdings, someone has to draw the chain — and it is better that someone is you.
Who represents the entity. Does the person signing have the power to do so? Signing rules are on the register and get checked. A contract signed by someone who cannot bind the company is a contract with a problem.
What the entity does. Does the declared activity match the corporate purpose, the activity code and what the website shows? Divergences here always generate questions.
Whether there is risk exposure. Screening against sanctions lists, politically exposed persons and adverse media, for both the company and its beneficial owners.
What usually goes wrong
The ownership chain does not close. This is the number one cause of delay. If there is more than one corporate layer, prepare a one-page diagram running from the company down to the natural persons, with percentages.
Documents do not line up. Registry address different from the tax address. A name spelled differently across documents. A director appointment date that does not match. Each divergence is another round of email.
The business model is not explained. The corporate purpose is written by a lawyer and serves another function. Write one paragraph in plain language: who the clients are, what they buy, how much they pay, how often, and where the payments come from.
Documents in several languages without translation. If the structure spans jurisdictions, anticipate certified translations of the essential documents.
How to prepare once, for every time
Build a standing file and keep it current. It should contain:
- A current commercial registry certificate, or its access code
- The beneficial ownership declaration
- A corporate structure diagram
- Identification and proof of address for directors and beneficial owners
- Proof of the registered office address
- Declaration of commencement of activity and clean tax and social security standing
- A plain-language description of the business model
- The applicable internal policies
With this file assembled, a KYB request stops being a two-week project and becomes a ten-minute email. That is exactly what a Trust Center is for: not to impress, but to already have the answer ready when the question arrives.