What’s a KYB ?

When you are opening a new account at a bank or a payment institution, you might hear talk about something called KYB.

KYB stands for Know Your Business. It is a regulatory and legal requirement for banks and other related institutions to identify and verify the identity of their clients. The term can also be used by customers to denote their own similar processes (KYC).

Banks undertake such processes to comply with various regulations, as the anti-money laundering (AML) regulation and the regulation on countering the financing of terrorism (CFT). KYB is a way to prevent banks from becoming involved with criminal or terrorist activity and thus helps them remain compliant with mandatory international rules.

In Europe, KYC is a regulatory obligation for Payment Institutions, as set in the European Directive 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for money laundering or terrorist financing purposes.

Banks accomplish their KYB requirements by verifying various information and by obtaining certain documents from reliable sources. These documents  include but are not restricted to, the company business registration and ID's of the ultimate beneficial owners (UBO's), meaning shareholders owning 25% or more of shares in the company.

The process does not end with the identification of the company, it goes far beyond this. Indeed, the bank or institution continuously observes  the activities of the correspondant entity to ensure that they meet a certain risk profile and a certain set of expectations. The ultimate goal is to identify and investigate any suspicious activity.

In addition to protecting the banks or institutions from being exploited or inadvertently used for criminal or terrorist activities, the KYB process also protects the clients as it helps avoid undesirable incidents of identity theft and fraud on their accounts.

While we are doing these checks, you will still be able to use Spendesk services, order cards and make payments within the regulatory spending limit of €10,000.

 

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