KYB is a legal requirement under UK money laundering regulations. Criminals regularly use shell companies to move illicit funds, obscure beneficial ownership, or create a false sense of legitimacy. Weak KYB is the open door that lets that through.

From a compliance manager’s perspective, this means pressure on two fronts. First, you need to gather the right data – Companies House records, UBO documents, ownership charts, ID verification for controllers. Then you need to assess it. Is this structure common for the sector? Are there red flags in the history? Has ownership changed hands in suspicious circumstances? You’ll also need to consider how you store and update that information.

Excel sheets and shared drives won’t cut it when regulators ask for an audit trail. Your KYB processes must be documented, repeatable, and defensible. If something goes wrong, you’ll need to show how and why you made your decisions.

KYB also plays into sanctions screening and PEP checks. You can’t screen an entity properly if you don’t know who actually controls it. And you can’t spot high-risk jurisdictions or politically exposed persons if your ownership records are incomplete. KYB is not an isolated task, but the starting point for effective ongoing monitoring.  You need a process that’s thorough but not obstructive: automated where possible, manual where necessary, and always guided by your internal risk appetite. 

What’s more, tour front-line staff need clear guidance on when to escalate a KYB case, what counts as suspicious, and how to deal with incomplete or inconsistent records.

KYB protects your business and the wider system. It helps you stop dirty money before it enters the chain, and shows regulators that you’re taking your responsibilities seriously.