Know-your-business, or KYB, is the process one company uses to verify that another business is legitimate and to identify the people behind it. Stripe's guide describes KYB as how companies verify that another business is legitimate before working with it, including who ultimately owns and controls it.
You meet KYB from two sides. A payment processor runs it on you when you open an account. And if you sell to other businesses, you may run a lighter version of it on your own buyers.
What KYB usually checks
Stripe's guide describes several parts of a KYB review:
- Registration details. Legal name, registration number, jurisdiction, address and legal structure, checked against official business registries.
- Documents. Items such as incorporation documents, articles of association and relevant licenses or permits.
- Beneficial owners and controllers. The real people who ultimately control the business, found by tracing ownership through any parent companies. They then go through identity verification, typically with government-issued ID and proof of address.
- Screening. The business and related individuals are checked against sanctions lists, politically exposed person lists and media sources.
Stripe's guide notes that who counts as a beneficial owner is set by regulatory thresholds, which can be based on ownership percentage, voting rights or other forms of control.
Why processors do it
Stripe says its regulators require it to collect information about the person creating an account, the business associated with it, and any individuals who ultimately own or control that business. Stripe describes these requirements as intended to prevent abuse of the financial system. Requirements vary by country.
KYB is ongoing
KYB is not a one-time check. Stripe's guide says that after onboarding, a business is regularly monitored for changes in ownership, activity or risk signals. Stripe's support page says account holders must promptly update their account with any changes, and that Stripe may contact them periodically to confirm their information.
In practice, that means telling your processor when owners, directors, your business address or what you sell changes, rather than waiting to be asked. The accuracy of this information is part of how payment processors review a merchant and of merchant underwriting.
KYB on your own buyers
If you sell only to business and research buyers, you need some way to know that a buyer is one. That check is usually much lighter than a bank's KYB: confirming the organization, a business email domain, credentials where relevant and a business ship-to address, in proportion to the order. Our guides on how to verify business and research buyers and know-your-customer basics for B2B suppliers go into this.
Claddr checks buyer type, credentials and ship-to against your compliance profile at checkout and stores the result against the order. It does not perform a processor's KYB on you, and it does not replace your own judgment about a buyer.