How to Strengthen KYB Checks with Domain Intelligence

Fraudulent businesses are on the rise, and financial institutions are struggling to distinguish between legitimate and high-risk entities during onboarding. Know Your Business (KYB) checks are meant to solve this issue by verifying a company’s legitimacy, ownership structure, and operational history. However, traditional KYB methods often rely on static databases and outdated records, making it difficult to verify small and newly registered businesses effectively.

With more businesses operating digitally, relying solely on official business registries and tax records is no longer sufficient. Many bad actors exploit these gaps in the KYB process, creating shell companies with little online presence or falsified documentation. To combat this, businesses need a more dynamic approach—one that leverages digital footprints to gain real-time insights into a company's online activity, reputation, and authenticity.

Fraudulent businesses often present inconsistencies across their digital presence, which can be detected through domain verification, website analysis, and connected account tracking. Domain intelligence and website verification are effective ways to identify fake businesses, assess merchant risks, and close the data gaps left by standard KYB methods.

What are KYB checks?

KYB (Know Your Business) is the corporate equivalent of KYC (Know Your Customer), a regulatory framework designed to ensure that companies properly identify and verify the businesses they engage with. Banks, payment service providers, insurance companies, and financial institutions are some of the regulated companies required to:

• Verify a company’s legal existence and registration status.
• Identify ultimate beneficial owners (UBOs) and key stakeholders.
• Assess business credibility and operational risks.
• Ensure the company and its beneficial owners do not appear on Money Laundering watchlists.

The lastest statistics indicated that the scale of money laundering via businesses is steadily increasing. Annually, between $800 billion and $2 trillion is laundered globally, with an estimated 80% channeled through businesses serving as fronts (Source: UN). This is not the only disconcerting fact. Fraudsters are employing more advanced methods, such as AI-generated deepfakes, to bypass traditional verification processes. In North America, the proportion of deepfake-related fraud more than doubled from 2022 to Q1 2023.

Business identity theft is another a growing concern. In fact, 79% of companies experience business identity theft, which in turn creates a greater need for more advanced and streamlined business verification processes. 

KYB checks are especially crucial for companies operating in industries vulnerable to fraud, money laundering, and financial crimes—such as fintech, lending, gambling, and e-commerce. While KYB checks are a regulatory necessity, their effectiveness is often hindered by outdated and incomplete data sources.

The difficulties of verifying businesses quickly and effectively

Financial institutions (FIs) and regulated businesses struggle to verify small and newly registered businesses efficiently. Legacy KYB data providers often face difficulties in sourcing reliable data, particularly for small-to-medium-sized enterprises (SMBs) that lack extensive corporate records. Many small businesses operate under the radar of traditional checks, making it difficult to examine their legitimacy through conventional means.

KYB data gaps and verification failures
A significant issue with KYB verification is the incomplete and outdated nature of traditional business databases. In a lot of cases, small business customers cannot be verified using existing data sources due to:

• Limited public visibility  – many SMBs do not appear in national business registries or corporate databases, leaving a gap in verification data.
• Frequent ownership changes – business structures, stakeholders, and addresses frequently change, yet most databases fail to update in real time.
• Data maintenance issues – many KYB data providers rely on static information, meaning a company’s details could be outdated or missing entirely.

These challenges create significant risks for banks, lenders, insurance providers, and other businesses that require accurate merchant and business customer verification. In some cases, these verification gaps even result in false negatives, where genuine businesses are wrongly flagged as unverifiable.

The impact on business onboarding
For companies that are required to perform KYB checks when onboarding merchants, partners, or business clients, inefficient verification processes lead to:

• Delayed onboarding – lengthy verification processes create friction for businesses trying to establish new partnerships.
• Missed revenue opportunities – failing to verify businesses accurately leads to lost clients and higher abandonment rates.
• Increased fraud risks – fraudulent entities slip through verification gaps, exposing financial institutions to compliance risks.

Without access to real-time, enriched data sources, businesses cannot effectively pinpoint potential risks. 

The data challenges faced by KYB providers in verifying SMBs

Traditional KYB data providers are often built around structured business registries, which work well for verifying large corporations but struggle when dealing with small-to-medium-sized businesses (SMBs). Unlike major enterprises, SMBs often lack a consistent presence across traditional data sources, making verification more complex.

Why KYB providers struggle with SMB data

Most KYB providers rely on official government databases, corporate filings, and tax records to validate business identities. While these sources are useful, they often fail in key areas:

• Unregistered and informal businesses – many SMBs, especially startups and sole proprietors, operate without formal business registrations in their early stages, making them nearly invisible to traditional KYB methods.
• Data fragmentation – small businesses frequently register across multiple jurisdictions, with variations in their legal names and documentation. KYB providers that lack cross-border coverage struggle to consolidate this information.
• Outdated business records – even when SMBs are registered, corporate filings are not updated frequently, leading to inconsistencies in ownership details, addresses, and financial statements.

The consequences of incomplete KYB data
When KYB providers fail to verify SMBs effectively, the impact extends across multiple areas. Onboarding processes become slow and inefficient, forcing companies to either delay business approvals or abandon potential clients due to verification challenges. Many legitimate small businesses face unnecessary rejections, not because they are fraudulent, but because their profiles lack sufficient verification data. This cautious approach leads to missed revenue opportunities and prevents promising startups from accessing essential financial services.

Beyond inefficiencies, inadequate KYB data increases exposure to fraud. Gaps in verification allow fraudulent entities to slip through the cracks, enabling the creation of shell companies, front businesses, and synthetic business entities. Without real-time validation and deeper insights into a business’s online presence, companies risk engaging with high-risk or non-existent corporate customers. As fraud tactics become more sophisticated, businesses need a verification strategy that extends beyond static data sources, capturing real-time digital footprints instead.

The rise of fake businesses and the limits of traditional KYB

Fraudulent businesses are becoming more sophisticated, making it increasingly difficult for financial institutions and service providers to distinguish legitimate enterprises from fabricated ones. Many fraudsters take advantage of gaps in KYB processes, registering shell companies with minimal documentation and no genuine operational footprint. Without comprehensive verification tools, businesses struggle to detect high-risk entities before onboarding them.

Why are fake businesses thriving?

Many fraudulent companies pass through KYB screening undetected because they appear legitimate on the surface. Registering a company requires little effort in many jurisdictions, and fraudsters exploit this by creating multiple entities with fabricated ownership structures. Once approved, these businesses engage in illicit activities such as money laundering, payment fraud, and synthetic identity abuse. Since most traditional KYB solutions rely on static, government-registered data, they often fail to flag companies that exist only on paper.

At the same time, financial institutions face increasing pressure to meet compliance requirements while maintaining a seamless user experience. To reduce risk, many organizations choose to reject potential business clients if their KYB records appear incomplete or outdated. While this cautious approach prevents onboarding some fraudulent entities, it also leads to false positives, where real companies are mistakenly excluded due to insufficient verification data. This problem is particularly common for small businesses and startups that lack a long-standing financial history or significant online presence.

The KYB blind spot

KYB checks are designed to prevent businesses from engaging with bad actors, but fraudsters know how to manipulate outdated verification models. Many businesses remain undetected due to limited access to real-time ownership changes, allowing criminals to use straw owners to register fake businesses.

Moreover, another problem is overreliance on government-issued data, which does not account for businesses operating under false pretenses. Some fake businesses fail to be detected because of the absence of online due diligence, leaving companies unable to verify a business’s true digital footprint.

With the rise of global fraud networks, businesses must rethink how they look at a business’s validity, risk exposure, and potential compliance violations. Instead of relying solely on static KYB records, organizations need access to dynamic, real-time intelligence that can uncover hidden risks before the onboarding process of a new business client even begins.

The Role of KYB Pre-Screening

Performing preliminary checks before the official KYB process begins is a highly effective way to protect financial institutions against fraudulent businesses. This silent pre-screening phase acts as a first layer of defense, filtering out businesses that show early signs of fraud.

In fact, before even checking official corporate filings, organizations can use digital intelligence to estimate whether a company has a verified online presence, established reputation, and verifiable operations. This approach strengthens fraud prevention by:

• Identifying shell companies that exist only on paper, which often lack an active website, social media footprint, or digital transactions.
• Detecting businesses with newly registered domains or suspicious ownership changes, common tactics used to bypass standard KYB checks.
• Assessing whether a company actively engages with customers through e-commerce platforms, advertising channels, and business directories.

Utilizing highly advanced AI agents, the most advanced KYB pre-screening solutions on the market flag inconsistencies in a business’s digital footprint before deeper verification begins. Businesses with fake domains, inactive websites, or unverifiable digital activity are quickly identified as potential risks. This early-stage intelligence allows financial institutions, payment processors, and fintech platforms to filter out bad actors before they reach the full onboarding process.

Enhancing KYB with Trustfull’s Domain Intelligence

Many fraudulent companies look genuine on paper but lack a meaningful digital presence, making them difficult to analyze through traditional KYB methods.

Trustfull's Domain Intelligence fills these verification gaps, offering a deeper, real-time view of a business’s online footprint, credibility, and operational history.

Instead of relying solely on static corporate records, financial institutions and regulated businesses can enhance KYB checks by analyzing a company’s domain activity, website structure, and online reputation. These insights provide a more dynamic risk assessment, helping organizations identify fake businesses, inactive entities, and high-risk merchants before onboarding them.

The Power of Deep Online Due Diligence

Unlike conventional KYB solutions, Domain Intelligence's suite of AI agents  captures real-time digital signals that reflect a company’s activity in the real world. Key capabilities include:

Domain verification
Determines whether a business domain is genuine, active, or flagged as suspicious. Many fraudulent entities register domains that lack any real online footprint, and early detection of inactive or fake websites helps prevent onboarding high-risk businesses.

Website screening
Analyzes a company’s website structure, homepage content, and SSL certificate details, offering valuable insights into how a business presents itself online. Shell companies often reuse website templates or lack essential security features, making them easier to flag through domain analysis.

Search engine rankings and digital presence
Evaluates search engine visibility, inbound links, and indexed pages to analyze a domain’s authenticity. Valid businesses typically have a well-documented online presence, while fraudulent companies tend to operate in isolated digital environments with minimal visibility.

Domain ownership and history
Tracks domain registration history, ownership changes, and past associations. Fraudsters often use newly registered or frequently transferred domains to conceal their activities, making ownership analysis a critical component of KYB verification.

Connected accounts and business verification
Identifies linked social media profiles, historical activity, and Google My Business data. A legitimate company usually maintains consistent business information across multiple platforms, while fraudulent businesses often lack an established online identity.

Marketplace activity and digital advertising
Checks for business presence on e-commerce platforms like Amazon, Etsy, and eBay, along with advertising activity across Google, LinkedIn, and Meta. Fraudsters rarely invest in digital advertising or marketplace integrations, making the absence of these signals a potential red flag.

Image review and company insights
Gathers publicly available images, workforce size, and industry-related content to determine a business’s credibility. Companies with no visual or documented online presence often indicate a higher risk of fraud.

KYB verification is a critical component of fraud prevention, but many businesses struggle to validate SMBs, newly registered companies, and cross-border entities using traditional methods alone. Relying on static data sources is no longer enough, as fraudulent businesses continue to exploit verification gaps. To strengthen KYB checks, organizations must adopt a real-time, intelligence-driven approach that captures a business’s online footprint, ownership patterns, and digital credibility.

Explore how Domain Intelligence provides the missing layer of verification, and find out how it can detect risks early while streamlining onboarding and ensuring compliance with KYB and AML regulations.