KYB Onboarding Checklist for Marketplaces

Know Your Business (KYB) onboarding is critical for marketplaces and platforms that need to verify and onboard merchants quickly while maintaining compliance. A streamlined KYB process can accelerate vendor onboarding, reduce abandonment, and ensure regulatory compliance.

This checklist provides a practical framework for building an efficient KYB onboarding process that balances speed with compliance requirements.

Pre-Onboarding Preparation

Set yourself up for success by preparing your KYB infrastructure before merchants arrive.

Technology Infrastructure

• ✅ Implement automated document verification systems
• ✅ Set up API integrations with data providers (Dun & Bradstreet, etc.)
• ✅ Configure sanctions and watchlist screening tools
• ✅ Establish secure document storage with encryption
• ✅ Build automated workflow management system

Compliance Framework

• ✅ Define risk tolerance and acceptance criteria
• ✅ Establish enhanced due diligence triggers
• ✅ Create compliance policies and procedures
• ✅ Set up audit trails for all verification steps
• ✅ Implement ongoing monitoring requirements

Essential Business Information Collection

Gather core business information efficiently without overwhelming potential merchants.

Basic Business Details

• Legal business name and any trade names (DBAs)
• Business registration number/EIN/Tax ID
• Date of incorporation or business formation
• Business type (LLC, Corporation, Partnership, etc.)
• Registered business address
• Primary business phone number and email

Business Operations

• Industry/sector and specific business activities
• Primary products or services offered
• Target markets and customer demographics
• Estimated monthly transaction volume
• Average transaction size
• Seasonal business patterns (if applicable)

Document Verification Requirements

Require the minimum necessary documents while ensuring comprehensive verification.

Core Documents (Required for All)

• Certificate of incorporation or business registration
• Articles of incorporation or operating agreement
• Business license (if required for industry)
• Tax identification document
• Bank account verification (voided check or bank letter)

Additional Documents (Risk-Based)

• Financial statements (for high-volume merchants)
• Proof of business address (utility bill, lease agreement)
• Professional licenses (for regulated industries)
• Supplier agreements (for resellers)
• Insurance certificates (for high-risk businesses)

Beneficial Ownership Verification

Identify and verify individuals who own or control the business entity.

Ownership Threshold Requirements

• Collect information on all individuals owning 25%+ of the business
• Identify all individuals with significant control or influence
• Document ownership structure and voting rights
• Verify identity of all beneficial owners
• Screen beneficial owners against sanctions lists

Required Individual Information

• Full legal name and any aliases
• Date of birth
• Residential address
• Government-issued ID (driver's license, passport)
• Social Security Number or Tax ID
• Role in the business and percentage ownership

Automated Verification Checks

Leverage technology to speed up verification while maintaining accuracy.

Business Verification APIs

• Business registry lookups (Secretary of State databases)
• Tax ID verification through IRS databases
• Credit bureau business credit reports
• Industry licensing verification
• Address validation and standardization

Individual Verification APIs

• Identity verification through credit bureaus
• Social Security number validation
• Address history verification
• Criminal background checks (if required)
• Sanctions and PEP screening

Risk Assessment Framework

Implement consistent risk scoring to determine appropriate due diligence levels.

Risk Factors to Evaluate

• Industry risk level (high-risk vs. standard)
• Geographic risk (domestic vs. international)
• Transaction volume and velocity
• Business model complexity
• Beneficial owner risk factors
• Regulatory compliance history

Risk-Based Due Diligence Levels

• Low Risk: Automated verification only
• Medium Risk: Enhanced documentation + manual review
• High Risk: Comprehensive due diligence + ongoing monitoring
• Prohibited: Automatic rejection for certain risk categories

Manual Review Process

Design efficient manual review workflows for cases requiring human evaluation.

Review Queue Management

• Prioritize applications by risk level and business value
• Set SLA targets for review completion (24-48 hours)
• Assign specialized reviewers for high-risk applications
• Track review performance and bottlenecks
• Escalate complex cases to senior compliance staff

Review Documentation

• Document all verification steps taken
• Record rationale for approval/rejection decisions
• Note any additional monitoring requirements
• Maintain audit trail for regulatory compliance
• Store all documentation securely with access controls

Ongoing Monitoring Requirements

KYB compliance doesn't end at onboarding. Establish ongoing monitoring processes.

• Regular sanctions screening (daily/weekly)
• Business registry updates and changes
• Credit monitoring for financial health changes
• Transaction pattern monitoring for unusual activity
• Annual business information updates
• Trigger-based reviews for significant changes

Communication and User Experience

Keep merchants informed throughout the onboarding process to reduce abandonment.

• Provide clear timeline expectations upfront
• Send automated status updates at key milestones
• Explain any additional documentation requests clearly
• Offer self-service status checking portal
• Provide dedicated support for onboarding questions

Performance Metrics to Track

Monitor these KPIs to optimize your KYB onboarding process:

• Application completion rate (started vs. submitted)
• Average onboarding time by risk level
• Automated vs. manual review ratios
• Approval/rejection rates by business type
• Customer satisfaction scores
• Compliance audit findings and remediation

Regulatory Considerations by Jurisdiction

Adapt your KYB process to meet local regulatory requirements.

United States

• FinCEN beneficial ownership requirements
• OFAC sanctions screening
• State money transmitter licensing compliance
• Industry-specific regulations (SAFE Act for mortgage)

European Union

• 4th and 5th Anti-Money Laundering Directives
• PSD2 requirements for payment institutions
• GDPR data protection compliance
• Country-specific business registry requirements