# 24 KYB risk factors you should consider

Gauging KYB risk can be tricky. Here are 24 KYB risk factors to incorporate into your KYB process.

Shana Vu

10 min

## Key takeaways

Your Know Your Business (KYB) processes should help you gauge the risk of working with another business or entity. It’s important not to gauge KYB risk with only a small number of signals. The more risk factors you can evaluate, the more thorough a picture you can paint about a potential business partner or customer.

## KYB risk factors

It’s important to note that the presence of one or more of these risk factors does not necessarily indicate that you shouldn’t be working with a given company. It simply means that a degree of risk exists, which you might consider as you decide whether or not you want to be doing business with the entity.

### General risk signals

These risk signals are the ones that most businesses will want to check as a general best practice.

1. **TIN number**  
   *What it means:* In the United States, businesses must have a valid Taxpayer Identification Number (TIN). The existence of a valid TIN indicates that the business or individual has registered with the IRS.

2. **Corporate registration status**  
   *What it means:* A legitimate business should be actively registered with the Secretary of State in at least one state.

3. **Business registration number**  
   *What it means:* Companies are typically assigned a business registration number when they register with a country’s business registry.

4. **Sanctions list**  
   *What it means:* Regulatory bodies maintain sanctions lists detailing individuals and businesses involved in illegal activity.

5. **Adverse media**  
   *What it means:* Negative news coverage about a business or individual tied to crime or scandal.

6. **Business documents like articles of incorporation**  
   *What it means:* Official documents submitted during business registration, confirming legitimacy.

7. **VAT number**  
   *What it means:* Businesses operating in the EU are assigned a VAT number.

8. **Business address type**  
   *What it means:* Expecting a well-established business to operate out of a commercial address.

9. **Business entity type**  
   *What it means:* Understanding the legal entity of the business, such as LLC, partnership, etc.

### Beneficial owners risk signals

10. **KYC verification**  
    *What it means:* A business's ultimate beneficial owners must be identified and verified.

11. **Employment verification**  
    *What it means:* Confirming individuals are associated with the business in question.

### Financial history risk signals

12. **Appearance in third-party financial data**  
    *What it means:* Confirmation that a business has engaged in transactions.

13. **Business liens**  
    *What it means:* Legal claims to a company’s assets due to unpaid debts.

14. **Business credit report**  
    *What it means:* Information revealing a business's creditworthiness.

15. **Presence on a public stock exchange**  
    *What it means:* Legitimate businesses typically submit extensive documentation to be listed.

16. **Better Business Bureau (BBB) rating**  
    *What it means:* Ratings based on customer complaints and public data about a business.

17. **CFPB complaints**  
    *What it means:* Checking for consumer reports against the business can indicate reputational risks.

18. **501(c)(3) status**  
    *What it means:* Indicates tax-exempt and reputable status for nonprofit organizations.

### Online presence risk signals

19. **Email risk**  
    *What it means:* Business emails linked to their domain indicate a more established business.

20. **Social media profile**  
    *What it means:* A certain level of online activity is expected from businesses.

21. **Business website verification**  
    *What it means:* A legitimate website often provides key context about a business's risk.

### Other risk signals

22. **Suspicious links to other businesses**  
    *What it means:* Shared attributes with known suspects can indicate potential fraud.

23. **Industry classification**  
    *What it means:* Some industries may present higher risks based on regulatory scrutiny.

24. **General firmographic information**  
    *What it means:* Only engaging with businesses that meet certain criteria, such as employee headcount or revenue.

## Persona powers KYB evaluation and risk assessment

As you can see, getting a clear sense of KYB risk requires you to consider a number of different factors. A better option is to work with a KYB platform capable of performing as many of these checks as possible — a platform like Persona.