When the business name on your application doesn’t match IRS records, your account approval stalls, and every day it sits in pending is a day your contractors and sellers go without payouts. KYC and KYB verification decide how fast that queue clears. This post covers what KYC and KYB mean, which documents each requires, and how our mass payouts platform completes both checks together in 48 hours or less.
TLDR:
- KYC verifies individual identity; KYB verifies business identity. Both are standard compliance requirements for fintechs and their banking partners.
- KYC has three components: Customer Identification (CIP), Due Diligence (CDD), and continuous monitoring.
- Your legal business name must exactly match IRS records, or verification will be delayed.
- Using a DBA name instead of your registered legal name is a common cause of delays.
- Routable completes KYC/KYB verification in 48 hours or less, running both checks simultaneously at onboarding.
Disclaimer: This article is for informational purposes only and is not legal, tax or compliance advice. KYC, KYB and tax reporting requirements vary by jurisdiction and change over time, so consult a qualified legal or tax advisor about your specific obligations.
What KYC Means
KYC means “know your customer” though sometimes the term is also a shorthand for “know your client.” KYC verification is the core process of checking and confirming that customers are who they say they are.
Per KYC guidelines, banks and financial institutions are required to understand their customers’ financial dealings. A bank, for example, could be held liable for opening an account used by a criminal running a money laundering scheme. KYC exists to stop criminals from moving money through legitimate accounts.
What Is KYC in Banking?
Where KYC Rules Came From
KYC is the identity check you go through when you open a bank account. Know your client (KYC) rules require you to provide information such as employment status, income and date of birth. The Bank Secrecy Act of 1970 laid the groundwork by requiring recordkeeping and reports on cash transactions over $10,000. Formal customer identification requirements followed with the USA PATRIOT Act in 2001. As more business moved online, banks added KYC rules to reduce crime and prevent fraud. The U.S. Financial Crimes Enforcement Network (FinCEN) also added rules banks must follow when verifying a customer’s identity.
Why KYC Now Applies Beyond Banks
If your platform moves money, expect the same KYC standards banks follow, whether directly as a regulated entity or through your banking partners. Those standards have grown stricter over time. Non-compliance is costly: Fenergo reported $10.6 billion in global financial-institution fines in 2020 for AML, KYC, data privacy and MiFID violations.
Who Is Required to Have KYC?
Banks and other covered financial institutions must comply with KYC regulations, and fintechs that move money, like Routable, apply the same standards. You’re likely doing business with people you’ve never met face-to-face, so their identity documentation needs to be checked and validated.
You’ll need to verify basic facts about your customers, including their legal name, age and home location. Sometimes KYC verification requires more in-depth documentation, too. (We explain what documents are required in the sections below.) KYC verification is a standard requirement for business-related payments and helps you power mass payouts at a greater scale safely and securely.
The Three Components of KYC
There are three key components of KYC verification: Customer Identification Program (CIP), Customer Due Diligence (CDD) and continuous monitoring. Let’s break down what each of these means, and why it’s important that organizations like Routable carry them out.
- Customer Identification Program (CIP): This involves confirming a person is who they claim to be. A customer may need to submit a valid driver’s license or passport, for example. A business may need to provide articles of incorporation or a valid business license, among other documents. Financial statements may also need to be verified.
- Customer Due Diligence (CDD): Banks and financial institutions are required to analyze the risk of a customer’s account.
- Continuous monitoring: Instead of checking clients during onboarding alone, financial institutions keep watching accounts for changes in risk over time. At Routable, every payee is screened against 6,000+ watchlists at onboarding and again right before each payment goes out.
What Is KYB?
KYB (know your business) extends KYC to businesses. It requires fintechs to verify a business’s identity and confirm it isn’t laundering money.
What a KYB File Includes
In practice, KYB means collecting proof that the business exists, is in good standing and is run by the people it says it is. A typical U.S. KYB file includes an IRS-issued EIN letter, filed Articles of Organization or Incorporation, and a Certificate of Good Standing from the state where the business registered. The legal name on those documents must match the name on the application. If a seller applies as “Bright Side Coffee” but the IRS has “BSC Holdings LLC” on file, the names don’t match and the application stalls until they line up.
How KYB Varies by Jurisdiction
Requirements vary by jurisdiction. In the U.S., FinCEN’s customer due diligence rule requires banks and other covered financial institutions to identify the beneficial owners of the legal entities they onboard. Beneficial owners are the individuals who own or control the business. Other countries check businesses against their own public company registries. If you onboard payees across borders, expect a U.S. LLC’s KYB documents to differ from what a business registered in another country can provide.
At Routable, What Are KYC/KYB Requirements and How Do They Work?
At Routable, we verify both KYC/KYB at the same time. Customers must provide proof of basic information about themselves to verify both their identity and their business. For example, a customer can provide a driver’s license or other ID card for KYC verification. For KYB, they may upload documents to confirm their registered business location or financial details.
|
KYC (Know Your Customer) |
KYB (Know Your Business) |
|
|---|---|---|
|
What it checks |
Identity of an individual representative |
Identity and legitimacy of the business entity |
|
Who provides it |
A designated company representative (e.g., controller) |
The business itself |
|
Key documents |
Government-issued photo ID (driver’s license or passport); SSN or passport number; phone number and current home location |
IRS-issued EIN letter; Articles of Organization or Incorporation; Sales/Use Tax License; Business License; or Certificate of Good Standing |
|
Core data required |
Full legal name, date of birth, current home location, phone number |
Legal business name, business type, EIN, business category, registered business location |
|
Checked simultaneously? |
Yes. Routable runs both KYC and KYB at the same time during onboarding |
|
The KYC/KYB verification process at Routable is straightforward:
- Customers create an account.
- They add verification documents.
- Once verified, customers can start sending mass payouts and disbursements.
Business Details and Documents
You provide your legal business name, business type, EIN, business category and registered business location. To avoid delays, the legal business name you enter in Routable must exactly match the name on file with the IRS. If you operate under a DBA (doing business as), enter the legal business name, not the DBA. The same rule applies to W-9 collection: the name on the W-9 must match IRS records.
To complete KYC/KYB verification, you upload an IRS-issued EIN letter. If you can’t find the letter or lost it, follow the KYC/KYB instructions in your Routable dashboard or contact the Routable team.
Customers also have the option to instead upload:
- Filed and stamped Articles of Organization or Incorporation
- Sales/Use Tax License
- Business License
- Certificate of Good Standing
Representative Details
You also submit details for one representative authorized to act for the business, typically the controller or a beneficial owner. The representative must:
- Provide their phone number and current home location
- Upload a government-issued ID and ID number
Acceptable ID is a driver’s license or passport, plus an SSN or passport number. This information is required to comply with U.S. Federal customer due diligence rules.
How to Avoid Approval Delays
- Enter your legal business name exactly as it appears in IRS records, not a DBA.
- Upload your IRS-issued EIN letter, the fastest route to verification.
- If you aren’t a controller or beneficial owner, use the dashboard’s invite option to add a team member who is.
- Take a clear photo of your ID showing all four edges with no glare or blur. Retake it if needed, since a clean photo speeds approval.
How Does Routable Verify the Payees You Pay?
Routable verifies payees during onboarding with TIN validation, bank account ownership verification and sanctions screening against 6,000+ watchlists. TIN validation and watchlist screening are part of Routable’s Vendor Compliance Checks. Your own KYC/KYB confirms who you are as the sender; payee checks confirm who receives your money.
- TIN validation: Routable checks each payee’s name and EIN or SSN against IRS records. A mismatch can trigger an IRS B-Notice and 24% backup withholding on future payments, so catching it at onboarding keeps your payouts clean.
- Bank account ownership verification: Routable confirms the account belongs to the payee before any funds move.
- Watchlist screening: Payees are screened against OFAC, EU, FTO and other lists at onboarding and before each payment (see how OFAC screening works for mass disbursements). If a payee gets flagged, Routable holds only that payment for review while the rest of the batch keeps processing.
- Tax form collection: Your branded onboarding flow collects a W-8BEN or W-8BEN-E from international payees and a W-9 from U.S. payees before the first payment.
These checks matter most on instant rails like RTP and FedNow, where payments settle in seconds and can’t be reversed (see the difference between RTP and ACH payments). Verification before the send is your last line of defense against paying the wrong person.
How Long Does KYC/KYB Verification Take?
Routable typically completes KYC/KYB verification in 48 hours or less, combining automated document checks with a review from a real member of our team. That speed matters more than it sounds.
When you’re onboarding payees at scale, verification latency is a pipeline bottleneck. Your payees wait on your approval first: until your account is verified, you can’t send payouts. Every day a contractor, creator, or gig worker sits in a pending state is a day they cannot receive their first payout, and a day they might choose a platform that moves faster. At hundreds of onboardings per month, a slow verification layer does more than delay individual accounts; it creates a compounding backlog that ops teams cannot clear manually without adding headcount.
A 48-hour target on account approval means you scale your payee network predictably, without manual delays turning into a structural ceiling on how fast you can grow.
FAQ
What is the difference between KYC and KYB?
KYC (know your customer) confirms the identity of an individual, while KYB (know your business) verifies the identity of a business entity. At Routable, both checks happen simultaneously: you provide personal ID for KYC and business registration documents for KYB in the same onboarding flow.
What documents do I need to complete KYC/KYB at Routable?
For KYB, you need to provide your legal business name, EIN, business type, business category, and registered location, along with one of the following: an IRS-issued EIN letter, filed Articles of Organization or Incorporation, a Sales/Use Tax License, a Business License, or a Certificate of Good Standing. For KYC, a designated company representative must submit a government-issued photo ID (driver’s license or passport) and their SSN or passport number, plus their phone number and current home location.
How long does KYC/KYB verification take at Routable?
Routable typically completes verification in 48 hours or less, combining automated document checks with a review from a real team member. A common cause of delays is a name mismatch: enter the legal business name on file with the IRS, not a DBA (doing business as) name. Also upload a clear photo of your ID showing all four edges with no glare or blur.
Do my payees have to go through verification too?
Yes. Your KYC/KYB confirms who you are as the sender, and payee checks confirm who receives your money. During onboarding, Routable validates each payee’s TIN against IRS records, verifies bank account ownership and collects a W-8 or W-9 tax form before the first payment. Screening continues after onboarding too: every payee is checked against 6,000+ watchlists, including OFAC, EU and FTO lists, at onboarding and again right before each payment goes out.
Can I send payouts before my KYC/KYB verification is complete?
No. You can’t send payouts or disbursements until your account is verified. Routable typically completes verification in 48 hours or less. To start your first payout cycle as fast as possible, enter a legal name that matches IRS records and upload a clear EIN letter when you create your account.
Why does using a DBA stall KYC/KYB approval?
Verification checks your legal business name against IRS records, so a DBA creates a mismatch. If the IRS has “BSC Holdings LLC” on file and you apply as “Bright Side Coffee,” the application stalls until the names line up. Enter the registered legal name, not the DBA.