Reference · 22 terms

Vendor verification & KYB glossary

Plain-English definitions covering KYB methodology, beneficial ownership, sanctions screening, and the procurement vocabulary that governs vendor verification. Written for procurement, compliance, and finance buyers who need the vocabulary before a first call.

Beneficial ownership 2

Beneficial Ownership Information (BOI)

Also: BOI

Data identifying the individuals who ultimately own or control a legal entity. In the US, certain reporting companies are required to file beneficial ownership information with FinCEN under the Corporate Transparency Act; the scope of who must report has narrowed since original enactment, so current applicability should be confirmed directly with FinCEN guidance.

See: vendor verification, know your business kyb

Ultimate Beneficial Owner (UBO)

Also: UBO, beneficial owner

The natural person or persons who ultimately own or control a legal entity, even when ownership is structured through intermediate holding companies, trusts, or nominee arrangements. Identifying the UBO, not just the entity itself, is the core of most beneficial-ownership verification.

See: know your business kyb, supplier verification

Due diligence 5

Business Credit Report

A report on a business's financial condition, typically including payment history, filed financials, and risk scoring, produced by a business credit bureau and used as one input into financial-stability screening.

See: vendor background check, supplier verification

Enhanced Due Diligence (EDD)

Also: EDD

A deeper level of due diligence applied to higher-risk customers, vendors, or transactions, for example those in higher-risk jurisdictions or industries, beyond the standard due diligence applied to lower-risk relationships.

See: know your business kyb, vendor background check

Financial Stability Screening

Also: financial health screening

Assessing a vendor or supplier's financial condition, using business credit reports, filed financials, or a proprietary financial-health score, to estimate the risk it will be unable to perform a contract or remain a going concern.

See: supplier verification, vendor background check

Shell Company

A legal entity with little or no substantive business operations, assets, or employees, often used to obscure beneficial ownership or move funds. Identifying shell-company red flags is a standard objective of beneficial-ownership verification.

See: know your business kyb, vendor background check

Supplier Audit

A structured review of a supplier, which may cover financial stability, ownership, quality systems, or compliance practices depending on scope, typically performed before or during an ongoing supplier relationship rather than only at initial onboarding.

See: vendor background check, supplier verification

KYB basics 6

Business Registration Verification

Also: registration verification

Confirming that a business is legally registered and in good standing with the relevant government registry (a Secretary of State, Companies House, or equivalent), including confirming its correct legal name and active status.

See: vendor verification, supplier verification

Know Your Business (KYB)

Also: KYB

The process of verifying that a business entity is real, legally registered, and accurately represented before onboarding it as a customer, vendor, or partner. The business-entity equivalent of Know Your Customer (KYC), which verifies individuals.

See: know your business kyb

Know Your Customer (KYC)

Also: KYC

The process of verifying the identity of an individual customer, typically as part of financial-services onboarding or anti-money-laundering compliance. Distinct from KYB, which verifies businesses rather than individuals.

See: know your business kyb

Point-in-Time Verification

A verification check performed once, typically at vendor onboarding, confirming a vendor's status as of that specific date. Contrasted with ongoing or continuous monitoring, which re-checks status periodically to catch changes after onboarding.

See: vendor verification, supplier verification

Registered Agent

An individual or company designated to receive legal and government correspondence on behalf of a registered business, typically listed in the business's state or jurisdiction registration record and checked as part of business registration verification.

See: vendor verification

Vendor Onboarding Verification

The point-in-time verification performed when a new vendor is added to a company's approved-vendor list, typically covering business registration, beneficial ownership, and sanctions screening before the vendor relationship becomes active.

See: vendor verification, supplier verification

Regulatory frameworks 4

Anti-Money Laundering (AML)

Also: AML

The broader body of law, regulation, and process aimed at preventing criminal proceeds from being disguised as legitimate funds. KYB verification and sanctions screening are components of a typical AML compliance program, though AML itself is a wider discipline.

See: know your business kyb

Corporate Transparency Act (CTA)

Also: CTA

A US federal law directing FinCEN to collect beneficial ownership information (BOI) from certain reporting companies. Its scope has narrowed since original enactment: a March 2025 interim final rule limited the reporting-company definition largely to certain foreign entities, with a final rule still pending as of mid-2026. Confirm current applicability directly with FinCEN guidance rather than assuming a fixed rule set.

See: vendor verification, know your business kyb

Customer Due Diligence (CDD)

Also: CDD

The process financial institutions use to verify customer identity and assess risk, codified in the US at FinCEN's CDD Rule (31 CFR 1010.230), which sets a 25% beneficial-ownership threshold and a separate control-person test for legal-entity customers.

See: know your business kyb, supplier verification

Third-Party Risk Management (TPRM)

Also: TPRM

The broader organizational discipline of identifying, assessing, and managing risk from vendors, suppliers, and other third parties across their full relationship lifecycle. Point-in-time vendor verification is one input into a TPRM program, not a substitute for the ongoing monitoring and governance a full TPRM framework covers.

See: supplier verification

Sanctions and screening 5

Adverse Media Screening

Also: negative news screening

Searching news and public-record sources for negative coverage of a business or its principals, such as fraud allegations, regulatory enforcement, or litigation, as part of a broader due-diligence or watchlist-screening process.

See: vendor background check

Politically Exposed Person (PEP)

Also: PEP

An individual who holds or has held a prominent public position, or a close associate or family member of such a person, carrying elevated corruption or bribery risk that many screening programs flag for enhanced due diligence.

See: supplier verification, know your business kyb

Sanctions Screening

Checking a business or individual against government sanctions lists, such as the OFAC Specially Designated Nationals (SDN) List, to confirm they are not a prohibited or restricted party before onboarding or transacting.

See: supplier verification, know your business kyb

Specially Designated Nationals (SDN) List

Also: SDN List, OFAC SDN List

A list maintained by the US Treasury's Office of Foreign Assets Control (OFAC) identifying individuals and entities that US persons are generally prohibited from doing business with. Screening against the SDN List is a baseline component of sanctions-aware verification.

See: supplier verification, know your business kyb

Watchlist Screening

Checking a business or individual against a broader set of lists than sanctions alone, typically including PEP registers and adverse-media sources in addition to government sanctions lists, as part of onboarding or ongoing monitoring.

See: supplier verification, know your business kyb

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