What is KYB (know your business)?

How lenders use it

KYB comes before a credit decision and again before funding. The lender confirms the company exists and is active on the official register. In the UK that is Companies House. In the Netherlands it is the KVK business register. The lender checks the registered name, number, address and status.

The lender then finds the people behind the company. It lists the directors and the persons with significant control. In the UK a person with significant control is someone who holds more than 25% of the shares or votes, can appoint most directors or otherwise controls the company. The lender follows the chain up through any parent companies to the real individuals, who are the ultimate beneficial owners.

Each individual is then checked as a person. The lender verifies identity and screens against sanctions lists, politically exposed person lists and adverse news. It also asks what the business does and where the money for the deal comes from.

KYB is an industry term and not a legal one. The legal duty is customer due diligence under anti-money-laundering law, such as the UK Money Laundering Regulations 2017. Whether a lender must follow it depends on its status and its regulator. Many lenders do the checks anyway. Klarefi's intake step can fetch the Companies House extract and attach it to the file as cited facts. The lender's compliance team reviews the result and decides.

Worked example

Example only. A UK company asks for a £120,000 loan. The register shows it is active with filings up to date. Two directors are listed. One shareholder holds 60% and a second holds 40%.

The 60% holder is itself a company. The lender follows the chain up and finds two individuals who each own half of that parent. Together with the 40% holder, that makes three people to identify and screen. A file that stops at the first company name is incomplete.

Common confusions

KYB is not the same as KYC. KYC means know your customer and covers individuals. KYB covers the business and then leads to KYC on the people behind it.

A company number on a document is not a check. The lender must look the number up on the official register and compare it with what the applicant gave.

UK and Dutch registers hold different data. Companies House shows officers and persons with significant control. The KVK register holds company data, and data on beneficial owners sits in a separate register.

Questions lenders ask

What does a KYB check include?

A register extract and the ownership chain down to the individuals. Identity checks on the directors and owners. Sanctions and politically exposed person screening, adverse news and a view of what the business does. High-risk cases get closer review.

What is the difference between KYB and KYC?

KYC verifies individuals. KYB verifies the company and its ownership. A full check does both, because a company is only as clear as the people who own and run it.

Who is a person with significant control?

In the UK, an individual who holds more than 25% of shares or voting rights, can appoint or remove most of the directors, or has significant influence or control. Companies must keep a register of these people and file it at Companies House.

How do lenders check a UK company?

They look up the company number at Companies House and compare the name and status with the application. They read the officers and persons with significant control and check the filings. Then they verify the people. A registry check does not replace identity checks.

Five Cs of credit: Five headings a credit team uses to judge a loan
Conditions precedent: What the borrower must deliver before the first draw
AI intake agent: Software that completes the file before credit review
Human in the loop: A person reviews and can change the result

This page is general information for lenders. It is not legal, tax or credit advice.