How AI Is Changing Business Verification (KYB) — A Practical Guide
- Anna Stylianou
- 5 days ago
- 6 min read
This article was created in partnership with iDenfy, an international company that provides an all-in-one compliance platform with built-in Know Your Business (KYB) software to automate business verification, anti-money laundering (AML), identity verification, and fraud prevention for businesses, leveraging AI, especially in FinTech.
If you’re working in compliance, risk, or operations - especially in a financial services company - you’ve probably heard of KYB, or Know Your Business.
It’s not a new idea. For years, regulators have required companies to verify the businesses they work with - whether they’re clients, partners, vendors, or third-party service providers. But as financial crime risks grow and more companies move online, KYB has become more important than ever.
But while the need for business verification has grown, so too has its complexity.
Traditional KYB processes are often time-consuming, fragmented, and prone to human error. That’s where artificial intelligence is starting to play a critical role - not just in theory, but in real, practical ways that are already improving workflows for compliance teams.
In this article, we’ll explore how AI is being used in KYB today, where it’s headed, and what compliance professionals should know about its capabilities and limits.
What Is KYB?
KYB (Know Your Business) is the process of verifying that a company you're working with is:
Legally registered
Who they say they are
Owned and run by real people
Not involved in financial crime, fraud, or sanctions issues
If you've heard of KYC (Know Your Customer) — KYB is similar, but it's focused on companies instead of individuals.
When you perform KYB, you're not just checking the company itself. You're also looking at:
The directors (who runs the company)
The shareholders or UBOs (Ultimate Beneficial Owners — who really owns it)
Any links to criminal activity, corruption, sanctions, or high-risk jurisdictions
Who Needs to Do KYB?
If you're in a regulated industry, you're probably required by law to perform KYB. This includes:
Banks, fintechs, and payment companies
Crypto exchanges and wallet providers
Securities and commodities brokers
Mutual funds and asset managers
Accountants, auditors, and tax advisors
Gambling operators
In the UK and Europe, this is covered by the EU Anti-Money Laundering Laws and Directives. In the U.S., it’s part of the Customer Due Diligence (CDD) Rule under the Bank Secrecy Act.
But even if you're not required by law, KYB is still important.
Many companies (especially B2B platforms and marketplaces) do KYB to protect against:
Fraudulent merchants or partners, e.g., avoiding chargeback fraud.
Money laundering through fake or shell companies
Reputational damage if a vendor is later exposed for financial crime
So whether it’s a regulation or just smart business — KYB matters.
What Does the KYB Process Look Like?
A typical KYB check involves several steps. Each one is important for understanding who you're working with and whether they pose any kind of risk:
Company Verification
Check the company’s name, registration number, legal status, and incorporation date.
Confirm it’s listed in a valid registry and hasn’t been dissolved or blacklisted.
Ownership Check (UBO Identification)
Find out who owns the company. This could be a single person, multiple shareholders, or even another company.
If ownership is layered or hidden, you may need to dig deeper to reach the real people behind it.
Director and Management Review
Who runs the business day-to-day?
Are the directors involved in other companies with legal or financial issues?
Sanctions Screening
Check if the company or any of its owners/directors are on sanctions lists (like OFAC in the U.S. or the EU Consolidated List).
This is crucial because doing business with a sanctioned entity can result in serious legal consequences.
PEP and Watchlist Checks
Look for links to Politically Exposed Persons (PEPs), who may pose higher corruption risks.
Check global watchlists and databases to flag anyone involved in financial crime, terrorism, or fraud.
Adverse Media Review
Scan for negative news coverage - lawsuits, regulatory actions, financial trouble, or criminal investigations.
In practice, doing all this can take significant time and resources, especially if you have to cross-check data across multiple registries and documents.
And that’s exactly where AI can help.
Where AI Fits Into the KYB Process
AI can support AML professionals by automating the most repetitive, manual tasks. Here are some of the ways AI is already improving KYB:
1. Document Summarization
Imagine you’ve downloaded a 20-page credit bureau report or government filing. AI can read the entire file and give you a clean summary in seconds:
Legal name, registration number, and incorporation details
Registered address and contact info
List of directors and shareholders
Financials like turnover and credit score
Any legal filings, bankruptcies, or liens
Key risk flags (e.g., high-risk address or previous defaults)
This saves time and helps you make decisions faster, without skipping critical details.
2. Ownership Mapping
If a company has a complex ownership structure, AI can trace through the layers and identify the real beneficial owners, even if they’re hidden behind multiple entities. This is especially helpful when dealing with international companies or corporate groups.
3. Automatic Sanctions & PEP Screening
Instead of checking each name one-by-one, AI systems can instantly screen all relevant individuals against:
Global sanctions lists (OFAC, EU, UN, etc.)
PEP databases
Law enforcement watchlists
Known fraud networks
The system assigns risk scores to any matches, so you can focus on the ones that matter.
4. Risk Detection and Flagging
AI tools are trained to spot patterns that suggest potential risk such as:
Shared addresses with other flagged companies
Directors involved in many dissolved entities
Sudden changes in credit rating or ownership
Conflicting registry data vs. what the company provided
Instead of manually digging for these issues, AI highlights them upfront.
5. Ongoing Monitoring
Beyond onboarding, AI-enabled KYB tools can continuously monitor business partners or vendors and alert compliance teams to any changes - such as new sanctions, changes in ownership, or new negative news. This reduces the need for periodic manual reviews and helps maintain a risk-aware relationship over time.
This helps you stay compliant without needing to constantly re-check your vendor or client base manually.
A Practical Example: What AI Can Deliver in Seconds
Let’s say your company needs to onboard a new partner, “Example Technologies Ltd”.
You enter their registration number into your KYB platform. Within 30 seconds, the AI gives you a summary:
Company Overview
Name: Example Technologies Ltd
Jurisdiction: Ireland
Status: Active
Registered: 2018-02-14
Address: 12 Merrion Square, Dublin
Directors: Aoife Byrne, Liam Doyle
UBOs: Aoife Byrne (100%)
Credit Rating: Moderate
Sanctions Check: Clear
PEP Check: One director is a relative of a local official (low risk, flagged for review)
Adverse Media: One mention related to a delayed product launch — no legal issues
Risk Flags:
Shared address with 6 other companies
Company registered one year after original domain purchase (worth noting, not critical)
This is what AI makes possible - fast, organized, and clear information to help you make informed decisions.
The companies seeing real value from AI in KYB are those who treat it as an enhancement, not a replacement.
Domantas Ciulde | CEO of Idenfy
What AI Can’t Do
AI is powerful - but it’s not perfect. Here’s what it can’t do:
Make judgment calls: it can flag risks, but humans still need to interpret them in context.
Understand context or relevance: a watchlist match might not be relevant, and only a human can decide that.
Replace due diligence: AI helps you gather and assess information faster, but it’s not a shortcut for compliance responsibility.
AI helps you work smarter, but it doesn’t replace your expertise.
Final Thoughts
As the demand for faster, safer, and more reliable business onboarding grows, KYB is becoming a necessity. And the use of AI in KYB is not just jargon - it’s a practical tool that’s already improving the way companies verify business partners, reduce risk, and stay compliant.
But the companies seeing real value from AI in KYB are those who treat it as an enhancement, not a replacement. They combine automation with experienced judgment, building programs that are both scalable and trustworthy.
If you're just starting out with KYB, or trying to improve your process, consider what parts of the workflow are slowing you down. That’s often where AI can make the biggest difference.
