How to Conduct KYB in the UK and Satisfy AML Regulations

These days, Know Your Business (KYB) requirements are a regulatory obligation more than a nice-to-have. The Money Laundering Regulations 2017 (MLR 2017) require it, the FCA enforces it, and any firm onboarding corporate clients in a regulated sector has to do it. While that part is clear, what is not clear is how you can stay compliant while working under the constraints of your own business.

Your product teams want to onboard customers faster, but your regulators want stronger, more in-depth evidence of verification. And if you get it wrong? The risk of heavy fines and a loss of trust in the business is a given. In fact, money laundering itself drains the UK of more than £100 billion a year, and the FCA issued fines totaling £124 million in 2025.

That’s why you treat KYB compliance as a core part of your onboarding and compliance process. In this guide, we’ll cover the UK KYB requirements and how to verify ownership.

Key Takeaways

• KYB is a legal requirement under the MLR 2017 for any UK business onboarding corporate clients in a regulated sector.
• The UK’s KYB framework spans multiple statutes, but the ECCTA 2023 is the biggest recent shift. From November 2025, all directors and PSCs must verify their identity with Companies House.
• The FCA has issued more than £1.07 billion in AML fines over the past decade. The ECCTA’s new “failure to prevent fraud” offense adds unlimited fines for large organizations without reasonable prevention procedures.
• A platform like AiPrise consolidates registry checks, UBO verification, sanctions screening, risk scoring, and ongoing monitoring into a single workflow so your compliance process scales with your onboarding volume.

What Is KYB and How Does It Apply to UK Businesses?

KYB (Know Your Business) refers to verifying a business’s identity, ownership, and compliance with applicable laws. It is a critical measure for mitigating risks, ensuring transparency, and maintaining regulatory adherence. By conducting KYB checks, businesses confirm the legitimacy of their corporate partners and safeguard themselves from fraudulent entities.

To put it in perspective: the UK companies register held 5.43 million companies as of March 2025, with more than 211,000 new incorporations in the first quarter alone. But not every one of those entities is legitimate. And you can use KYB verification to make sure you can pick out the fraudulent ones from the registered entities.

The Home Office Economic Crime Survey 2024 found that 27% of UK companies experienced at least one incident of fraud in the previous 12 months. Yet, only 15% believed they were at material risk beforehand.

In short: there’s a huge gap between perceived and actual exposure. This is what KYB processes close, and it’s also the baseline against which regulators measure you.

How KYB Differs From KYC In The UK

KYC (Know Your Customer) verifies individuals by checking their identity, address, media appearances, and resulting risk profile. KYB does the same, but for corporate entities. In the UK, both sit under the same MLR 2017 framework, but KYB adds layers that KYC typically doesn’t touch.

For instance, for KYB checks specifically, you need to cross-check information with Companies House and trace the full ownership to every Person of Significant Control (PSC). These individuals usually hold more than 25% of the shares or voting rights, so once you identify them, you have to conduct separate KYC checks for each. KYC checks don’t typically involve such elaborate procedures.

Here’s how they differ:‍

Which Sectors Need KYB Compliance In The UK?

• Banking and financial institutions: It’s directly regulated by the FCA and PRA, so banks and building societies face the strictest KYB requirements in the UK.
• Fintech and neobanks: They’re subjected to the same regulatory expectations as legacy banks. For instance, Monzo was fined £21.1 million in 2025 after the FCA found it had opened accounts for over 34,000 high-risk customers.
• Payments and cross-border payments: High transaction volumes across jurisdictions make payment firms natural targets for layered laundering schemes. The PSR’s mandatory APP fraud reimbursement requirement, effective since October 2024, adds another layer of compliance pressure.
• Stablecoins and crypto: As of 2026, crypto asset businesses must register with the FCA under the MLR 2017. As the sector grows, regulators are expecting these businesses to focus on beneficial ownership verification and sanctions screening to avoid penalties.
• Lending: Businesses like trade finance and corporate lending all require verified borrower identities to prevent fraud through complex ownership structures.
• Marketplaces: These are platforms that onboard business sellers—so they need to verify those entities to avoid facilitating trade in counterfeit goods or laundered funds.
• Legal and professional services: These services include solicitors, accountants, and trust and company service providers (TCSPs). They’re usually supervised by their professional bodies and HMRC for AML compliance.
• Estate agents and letting agents: HMRC AML fines for estate agencies surged 177% between 2021/22 and 2024/25, with agents accounting for 170 of 369 penalties in the most recent reporting period.
• Cash-intensive businesses: The 2025 National Risk Assessment estimates that £12 billion in criminal cash is generated annually in the UK. These businesses include mini-marts and car washes, which are usually cash-only, making them higher-risk channels for laundering.

What Does The UK’s KYB Regulatory Framework Look Like?

Core KYB Legislation In The UK

• Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLR 2017): It’s the primary framework that sets your obligations for customer due diligence, enhanced due diligence (EDD), ongoing monitoring, record-keeping, and suspicious activity reporting (SAR).

• Proceeds of Crime Act 2002 (POCA) and Terrorism Act 2000: These acts require reporting suspicious activity to the NCA.

• Sanctions and Anti-Money Laundering Act 2018 (SAMLA): It gives HM Treasury independent authority over financial sanctions.

• Economic Crime (Transparency and Enforcement) Act 2022: It introduces the Register of Overseas Entities and requires foreign companies that own UK property to declare their beneficial owners.

• Economic Crime and Corporate Transparency Act 2023 (ECCTA): It gives Companies House new powers to verify identities and share data directly with law enforcement.

• Companies Act 2006 (as amended): It underpins the broader system by requiring companies to maintain a PSC register and file annual confirmation statements.

Who Supervises KYB Compliance?

• The Financial Conduct Authority (FCA) supervises banks, payment firms, fintechs, and other financial services businesses.

• HMRC supervises AML compliance for sectors outside the FCA’s scope. This includes estate agents, accountants, and trust and company service providers.

• The National Crime Agency (NCA) receives and analyzes SARs and coordinates enforcement against money laundering and terrorist financing.

What Happens When You Don’t Comply With The UK’s KYB Regulations?

If you don’t comply with the UK’s KYB regulations, you’ll deal with hefty fines and loss of reputation. For instance, the FCA has issued more than £1.07 billion in AML fines across 27 cases over the past decade, mostly due to verification failures. On the other hand, Barclays paid £39.3 million for mismanaging money laundering risks in a corporate banking relationship, plus a separate £3.1 million penalty for account opening controls.

This only gets worse with the ECCTA’s “failure to prevent fraud” rule, which imposes unlimited fines on large organizations unless they have reasonable prevention procedures in place.

Documents Required To Conduct KYB In The UK

Certain documents are necessary to carry out adequate KYB checks:

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Note: It’s best not to treat Companies House data as the source of truth all the time. In 2025, Companies House acted against more than 100,000 companies. But what they uncovered was a network of just 30 entities responsible for incorporating up to 50,000 businesses. All of these businesses were suspected of involvement in illicit activities. So, it’s okay to start with registry data while verifying businesses, but you still need to cross-reference it with other sources to confirm a business’s identity.

5 Steps To Conduct KYB In The UK

Here’s how you can verify a business’s KYB in the UK:

Step 1: Collect and Verify Business Documentation

First, gather the entity’s registration documents from Companies House. And this needs to include aspects such as:

• Certificate of incorporation
• Registered address
• Articles of association
• Named owners/partners
• Active or resolved filing discrepancies

Tally up all that information to see whether the business actually has the appropriate licenses and permits for its stated activities. For example, if an entity says they’re a financial services company, they need to appear on the FCA’s Financial Services Register.

Note: You can automate this process with AiPrise’s automated company registry checks, which automatically scan global databases and collate and verify that information for you.

Step 2: Identify And Verify UBOs

Next, you need to trace the ownership chain to find every individual who holds more than 25% of shares or voting rights. This is the PSC (Person of Significant Control) threshold under UK law. For complex structures with multiple layers, you need to trace through each holding entity until you reach the right people.

Also, look at a business’s financial health through filed accounts, CCJs (County Court Judgments), and signs of insolvency proceedings or material financial distress. If they have issues, they’re at higher risk.

Note: Use the KYB platform to map the full Ultimate Beneficial Owner (UBO) structure and flag every individual who meets the control threshold.

Step 3: Screen Against Sanctions, Watchlists, and Adverse Media

After you’ve verified the UBO, check the entity and all identified UBOs against the following:

• OFSI UK Sanctions List
• UN Consolidated List
• EU sanctions
• OFAC’s SDN list

After that, run Politically Exposed Person (PEP) and Anti-Money Laundering (AML) screening for all individuals in the ownership and control structure. This is critical because the 2025 National Risk Assessment found that many established laundering networks use complicated business structures to hide and launder money.

Note: You can even automate this process using AiPrise’s built-in watchlist screening checks and manage all your flagged cases in one dashboard.

Step 4: Assess Risk And Apply EDD Where Needed

After you have all the information you need, assign a risk rating based on the following factors:

• Sector
• Geography
• Ownership complexity
• Transaction patterns
• UBO risk profile

If the customer is in a high-risk jurisdiction or KYB flagged suspicious information, conduct Enhanced Due Diligence (EDD) for deeper scrutiny. Within AiPrise, this means the risk scoring engine applies consistent, configurable thresholds to every business you check.

Step 5: Maintain Records And Meet Ongoing Obligations

After you complete the one-time verification process, you still need to maintain your ongoing obligations. You need to keep your due diligence records up to date and retain them for at least 5 years after the relationship ends. If you suspect criminal property or terrorist financing, then you need to file a Suspicious Activity Report (SAR) with the National Crime Agency (NCA).

You can use a platform like AiPrise to set reverification triggers and re-checks on a configurable schedule or when risk indicators change.

Standardize Your KYB Process to Stay Compliant in the UK

Your product team will always want to improve their onboarding speed. And regulators in your space will continue to put more pressure on businesses like yours to stay compliant. That’s not changing any time soon—but that doesn’t mean you can’t resolve that competing tension.

The best way to do that is to standardize and automate your KYB process. One way to do it is to use AiPrise’s KYB verification platform. It brings the following processes into one API:

• Automated registry verification
• UBO identification
• Document verification
• Sanctions screening
• Risk scoring
• Continuous monitoring

Instead of stitching together manual processes across scattered data sources, you get a compliance layer that turns verification into a repeatable process. As a result, you don’t have to worry about staying compliant even as your business grows.

Book a demo to see how AiPrise handles UK KYB verification end-to-end.

FAQs

How long do I keep records to satisfy the UK’s KYB obligations?

Regulation 40 of the MLR 2017 requires you to retain all due diligence records for at least five years from the date the business relationship ends. So, you need to have all the documents you used to verify the business, as well as the resulting risk assessments. In some cases, firms retain records longer for high-risk relationships as an added safeguard, but it comes down to your internal retention policy.

Can KYB processes be automated?

Yes, you can automate KYB verification. Platforms like AiPrise automate the core components of KYB right from company registry lookups and UBO identification to sanctions screening and ongoing monitoring. While the checks can be automated, you can still add a human review step for complex or high-risk cases.

What are the challenges of conducting KYB?

Some of the biggest challenges you’ll face are fragmented data sources, incomplete ownership records, outdated records, and the complexity of multi-layered corporate structures. That’s why you need to use a platform that can search the most up-to-date sources and verify documents automatically.

What are the benefits of KYB in the UK?

If you make sure that your organization follows the right KYB processes, you protect yourself from fraud and the resulting regulatory fines and reputational damage. Also, a good KYB process gives you a repeatable framework to scale KYB verification in line with UK laws and regulations, without having to scale headcount.

What verification methods exist for KYB?

KYB verification involves two methods: physical or electronic document verification and subsequent verification via government registries, sanctions lists, and adverse media sources. You can manually verify them by reviewing data from Companies House and cross-referencing them yourself or use an automated KYB platform like Aiprise to get the job done faster.