Know Your Business (KYB) Verification in Australia
KYB is the process of verifying that a business is real, active, and controlled by the people it claims. In Australia, AUSTRAC mandates KYB for regulated entities. For every other business, it is fast becoming a baseline expectation.
What is Know Your Business (KYB)?
Know Your Business (KYB) is the process of verifying a business entity before entering into a commercial relationship with it. Where KYC (Know Your Customer) focuses on verifying individuals, KYB focuses on confirming that a business is legally registered, actively trading, and controlled by the people who claim to represent it.
In Australia, this means checking the entity's ABN against the Australian Business Register, verifying its ASIC registration (for companies), identifying the directors and beneficial owners, and confirming that the bank account provided actually belongs to the business. Each of these checks closes a gap that fraudsters routinely exploit.
KYB is not a single product or regulation. It is a category of due diligence that sits at the intersection of fraud prevention, compliance, and good business practice. If you pay suppliers, onboard vendors, or process payments to other businesses, you are already doing some form of KYB. The question is whether your process is thorough enough to catch the risks it is meant to prevent.
KYB vs KYC: what is the difference?
KYB and KYC are complementary processes. Most payment verification scenarios require both. Here is how they differ.
KYC (Know Your Customer)
- Verifies an individual person
- Identity documents and biometric checks
- PEP and sanctions screening
- Confirms the person is who they claim to be
KYB (Know Your Business)
- Verifies a business entity
- ABN, ASIC, and registration checks
- Director and beneficial ownership identification
- Confirms the business is real and active
In practice, you need both. A valid ABN does not mean the person emailing you bank details is authorised to act for that business. And a verified individual does not prove they represent the company on the invoice. ezyshield combines KYB and KYC into a single verification flow, confirming the business, the person, and the bank account together.
What KYB checks include in Australia
A thorough KYB process in Australia covers several layers. Each check addresses a different risk.
ABN validation
Verify the Australian Business Number against the Australian Business Register (ABR). Confirm the ABN is active, the entity name matches what you have been given, and check the GST registration status. A cancelled or non-existent ABN is an immediate red flag.
ASIC company registration
For Pty Ltd companies, check the ASIC register to confirm the company is registered and active. Review the listed directors, registered office address, and principal place of business. A deregistered company or mismatched directors should trigger further investigation.
Director identification
Since November 2022, all directors of Australian companies must hold a Director Identification Number (director ID) issued by the Australian Business Registry Services. This unique identifier helps prevent the use of false or fraudulent director identities.
Beneficial ownership
Identify the individuals who ultimately own or control the business. This means looking beyond the registered entity to understand the ownership structure, including any trusts, holding companies, or complex arrangements. AUSTRAC requires regulated entities to identify beneficial owners as part of customer due diligence.
Bank account ownership
Verify that the bank account provided belongs to the business entity, not just that the BSB and account number are valid. This is the check that prevents payment redirection fraud. Live Confirmation of Payee queries the receiving bank directly to confirm ownership.
Who needs KYB?
Some businesses are legally required to perform KYB. For the rest, it is a practical safeguard against fraud and a growing expectation from regulators and partners.
Regulated entities
Banks, remittance providers, gambling services, and digital currency exchanges are legally required by AUSTRAC to verify business customers under the AML/CTF Act. KYB is a core part of their customer due diligence obligations.
Businesses making B2B payments
Any business that pays suppliers, subcontractors, or vendors should verify who they are paying. Supplier verification is essentially KYB applied to your payment process. The higher your payment volume, the greater the risk.
Platforms and marketplaces
If your platform facilitates payments between parties or onboards business users, KYB protects you from liability. Verifying the businesses on your platform reduces fraud, chargebacks, and regulatory exposure.
AUSTRAC requirements for business verification
For reporting entities under the AML/CTF Act, AUSTRAC sets out specific requirements for verifying business customers. These requirements form the legal backbone of KYB in Australia.
When onboarding a business customer, reporting entities must verify the full name of the entity, its ABN or ARBN, its registration status with ASIC (for companies), and the identity of the beneficial owners who ultimately own or control the business. "Beneficial owner" generally means any individual who owns 25% or more of the entity, or who exercises effective control over it.
AUSTRAC also requires ongoing customer due diligence. This means verification is not a one-off exercise. Reporting entities must keep customer information up to date and re-verify when there are changes to the business structure, ownership, or contact details. This aligns with the principle that verification at onboarding does not guarantee ongoing accuracy.
Even if your business is not a reporting entity, AUSTRAC's requirements provide a practical benchmark. The checks they mandate, ABN validation, ASIC registration, beneficial ownership, and ongoing monitoring, represent the standard of due diligence that auditors, insurers, and regulators increasingly expect from all businesses.
How ezyshield automates KYB
ezyshield's verification flow is KYB by another name. Every payee goes through automated business validation, identity confirmation, and bank account ownership checks before a single payment is processed.
ABN and ASIC validation
Automatically validates the business's ABN against the Australian Business Register. For companies, checks ASIC registration, director details, and company status. Flags cancelled, deregistered, or mismatched entities.
Biometric identity verification
Confirms the real person behind the business. Not just a name on an email, but a biometric match that verifies the individual is who they claim to be and is connected to the business entity.
Bank account ownership
Live Confirmation of Payee queries the receiving bank to confirm the account belongs to the business. This is the step that prevents payment redirection fraud.
Ongoing re-verification
KYB is not a one-time check. ezyshield re-verifies every payee before every pay run. If any detail changes, payment is blocked until the business is re-verified. This aligns with AUSTRAC's ongoing due diligence expectations.
Frequently asked questions
What is KYB (Know Your Business)?
What is the difference between KYB and KYC?
Is KYB a legal requirement in Australia?
What does KYB check in Australia?
How does ezyshield automate KYB?
Related content
AML/CTF Compliance in Australia
KYB is a core component of AML/CTF due diligence. Learn about the full compliance framework.
LEARNSupplier Verification Australia
How to verify suppliers before adding them to your payment system.
THREATPayment Redirection Fraud
The fraud type that KYB is designed to prevent.
PRODUCTHow ezyshield Works
See the full verification flow that combines KYB, KYC, and bank account ownership checks.
Automate your KYB process
ezyshield verifies every business, every person, and every bank account before payments are made. No manual checks. No gaps.