KYC vs KYB vs EDD — What's the Difference?
KYC vs KYB vs EDD — what's the difference? All three help an institution understand who it's dealing with, but one verifies a person, one a company, and one applies when the risk is higher.
Transcript
What's the difference between KYC, KYB, and EDD? KYC, KYB, and EDD are all used to help financial institutions understand who they are doing business with, but they serve different purposes.
KYC, or know your customer, focuses on verifying the identity of the individual. This usually includes things like their name, date of birth, address, and identification documents.
KYB, or know your business, applies when the customer is a company and looks at the business itself, its ownership structure, who ultimately controls it, and who are the main people involved in the business.
EDD, or enhanced due diligence, is used when there's a higher level of risk. That can mean gathering additional information, reviewing the source of funds, or conducting more detailed checks or a deeper investigation.
The basic principle is the same. The greater the risk, the deeper the level of verification. That's in order to keep us all safe and prevent financial crime.
Follow for more Fintech Explained by Demivolt, and don't forget to like and subscribe.
About this episode
KYC, KYB and EDD all exist so a financial institution understands who it is doing business with. They are not interchangeable, though: each answers a different question.
KYC — know your customer — verifies an individual: name, date of birth, address and identification documents. KYB — know your business — applies when the customer is a company, and looks at the business itself: its ownership structure, who ultimately controls it, and the main people involved.
EDD — enhanced due diligence — isn't a separate category of customer so much as a deeper pass over one. It kicks in where risk is higher, and can mean gathering additional information, reviewing the source of funds, or running more detailed checks. The principle underneath all three is the same: the greater the risk, the deeper the verification.
Key takeaways
- KYC verifies an individual — name, date of birth, address, identification documents.
- KYB applies when the customer is a company, covering ownership structure, ultimate control and the main people involved.
- EDD is a deeper level of checking applied when risk is higher: more information, source of funds, more detailed review.
- One principle runs through all three — the greater the risk, the deeper the verification.
Related from Demivolt
Ready to get started?
Open an account or talk to our team about your programme.