KYB: the complete guide to business entity verification

KYB (Know Your Business) is the regulatory process of verifying the identity, legal structure and compliance status of a corporate entity before establishing a business relationship. In Australia, this obligation falls under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), as amended, and is supervised by AUSTRAC. While KYC focuses on individual identity verification, KYB addresses the unique challenges of verifying companies, partnerships, trusts and other legal entities that can be used to obscure beneficial ownership and facilitate financial crime.

AUSTRAC has imposed significant civil penalties for AML/CTF failures, including the landmark AUD 1.3 billion penalty against Westpac in 2020 for systemic compliance breaches. The ASIC company register and ABN Lookup are the primary public sources for business verification in Australia, and ongoing regulatory reforms continue to strengthen verification requirements.

This article is provided for informational purposes only and does not constitute legal, financial or regulatory advice. Consult a qualified professional for questions relating to your specific situation.

What is KYB and why does it matter

KYB (Know Your Business) is the corporate equivalent of KYC. It is the set of checks that reporting entities must perform to verify that a business counterparty is a legitimate, registered entity with transparent ownership and no links to financial crime.

Under the AML/CTF Act 2006 and the AML/CTF Rules, reporting entities must identify and verify the identity of corporate customers, including their beneficial owners and the nature of the business relationship. This goes beyond a simple ASIC search: it requires cross-referencing multiple data sources to build a complete picture of the entity and its control structure.

The Australian Government has been progressing reforms to establish a beneficial ownership register, which will make beneficial ownership information more accessible and reliable. Reporting entities should monitor these developments while continuing to conduct thorough independent verification.

KYB vs KYC: key differences

KYB and KYC are complementary processes under the same AML framework, but they differ in scope, complexity and cost. The following table summarises the core distinctions.

KYB is inherently more complex than KYC because corporate structures can span multiple jurisdictions with layered holding companies, nominee directors and trusts. Tracing the ultimate beneficial owner often requires navigating registries in several countries.

For a comprehensive overview of the KYC process, see our complete KYC guide for businesses.

The KYB process in Australia: step by step

Verifying legal existence

The first step is confirming that the entity exists as a registered legal person. In Australia, this means obtaining or verifying the ASIC company extract and checking the company's status on the ASIC register. The register provides the Australian Company Number (ACN), registered office address, principal place of business, ANZSIC code, incorporation date, company type (Pty Ltd, Ltd, etc.) and the names of current directors and secretaries.

For foreign companies operating in Australia, the ASIC register shows details of Australian Registered Body (ARBN) registrations. Trusts, partnerships, and unincorporated associations have separate verification requirements.

Identifying beneficial owners

Under the AML/CTF Rules, reporting entities must identify individuals who hold more than 25% of shares or voting rights, have the right to appoint or remove a majority of the board, or exercise significant influence or control. AUSTRAC's guidance on customer identification and verification sets out the requirements for beneficial ownership identification.

As Australia does not yet have a dedicated public beneficial ownership register, verification relies on ASIC shareholder records, company-provided documentation, and independent research. Reporting entities must take reasonable steps to verify beneficial ownership information.

Document collection and verification

The following table details the documents required by entity type in Australia.

For vendor and supplier relationships, firms should also obtain evidence of ABN registration, workers' compensation insurance, and relevant professional indemnity cover. See our guide on vendor compliance certificate verification.

Sanctions screening and adverse media

KYB requires screening the entity, its directors and its beneficial owners against sanctions lists: the DFAT Consolidated List, UN Security Council lists, OFAC SDN list and EU consolidated list. This screening must be performed at onboarding and on an ongoing basis.

Adverse media screening supplements sanctions checks by identifying negative news coverage relating to fraud, corruption, regulatory action or litigation involving the entity or its principals.

Risk assessment and ongoing monitoring

Each verified entity is classified by risk level (low, standard, enhanced) based on objective criteria: sector, jurisdiction, ownership structure, PEP exposure and regulatory history. Enhanced customer due diligence (ECDD) is mandatory for entities operating in high-risk sectors or jurisdictions identified in AUSTRAC's guidance and the FATF high-risk jurisdictions list.

Ongoing monitoring involves tracking ASIC filings (new annual reviews, changes of directors, charges registered), sanctions list updates and adverse media alerts. AUSTRAC expects reporting entities to maintain a risk-based approach with documented policies and periodic reviews.

Sectors with the highest KYB exposure

All reporting entities under the AML/CTF Act must perform KYB on corporate customers, but certain sectors face heightened requirements. Banks, authorised deposit-taking institutions (ADIs), and remittance service providers process the largest volumes of corporate onboarding. Real estate agents, accountants, solicitors, and digital currency exchange (DCE) providers all have mandatory KYB obligations under the AML/CTF regime.

AUSTRAC has identified specific high-risk areas including correspondent banking, trade finance, trust and company service providers, and the digital currency sector. Reporting entities operating in these areas must apply enhanced customer due diligence as standard for all corporate relationships.

Automating the KYB process

Manual KYB verification for a single Australian entity takes 3 to 6 hours on average: gathering documents, querying the ASIC register, cross-referencing beneficial ownership data, screening sanctions lists and documenting findings. This timeline is unsustainable for firms onboarding dozens or hundreds of corporate clients monthly.

Automated KYB platforms reduce this to under 15 minutes by integrating directly with the ASIC register, ABN Lookup, sanctions databases and document verification engines. CheckFile provides a unified document verification platform that handles both KYC and KYB workflows, with automated extraction and validation of corporate documents.

For a sector-specific breakdown of due diligence requirements, consult our customer due diligence checklist by sector.

For a comprehensive overview, see our document verification complete guide. Our platform processes over 180,000 documents per month with 98.7% OCR accuracy and a 67% cost reduction compared to manual KYB verification.

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FAQ

What is the difference between KYB and corporate due diligence?

KYB is the regulatory component of corporate verification mandated by anti-money laundering law. Corporate due diligence is a broader commercial process that includes KYB but also covers financial health assessment, credit risk, operational capacity and reputational checks. KYB is a legal obligation for reporting entities; corporate due diligence also serves commercial risk management purposes.

How often should KYB checks be renewed?

The AML/CTF Act requires a risk-based approach rather than fixed timescales. High-risk entities should be reviewed annually, standard-risk entities every two to three years, and any material event (change of director, beneficial ownership update, new charges filed) should trigger an immediate review. Continuous monitoring of ASIC filings and sanctions lists enables event-driven reviews between scheduled assessments.

Does KYB apply to sole traders and partnerships?

Sole traders are verified through KYC rather than KYB, as they are natural persons. General partnerships without legal personality are subject to KYC for each partner. Companies (Pty Ltd, Ltd) and trusts with separate legal structures require full KYB verification including beneficial ownership identification.

What happens if a reporting entity fails to conduct adequate KYB?

AUSTRAC can impose civil penalties of up to AUD 28.2 million per contravention for body corporates. Individual officers can face personal liability. AUSTRAC can also issue infringement notices, enforceable undertakings, and remedial directions. The Westpac penalty of AUD 1.3 billion in 2020 for over 23 million contraventions demonstrates the scale of potential consequences.

Can ASIC data be relied upon for KYB?

ASIC data provides a starting point but cannot be relied upon in isolation. The register may contain outdated or inaccurate information, particularly regarding beneficial ownership. Reporting entities must verify the information independently using source documents, and AUSTRAC guidance makes clear that reliance on a single source is insufficient.

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