What is KYB, and why is it required?
Know Your Business (KYB) is a regulatory requirement that requires Betterment to verify the validity of the businesses we work with. This process involves identifying and verifying beneficial owners who hold at least a 10% stake in a company or, in the case of nonprofits, a control person. KYB helps maintain compliance with financial regulations and protects against fraud. This information is solely for verifying plan EINs, addresses, and beneficial owners. It ensures compliance and confirms that we are not doing business with sanctioned entities.
Who is considered a beneficial owner?
A beneficial owner is an individual who either:
- Exercises substantial control over a business, or
- Owns or controls at least 10% of a company’s ownership interests.
Entities such as corporations and trusts are not considered beneficial owners.
What is a control person, and when is one required?
A control person is an individual with significant management authority over a business. This includes roles like CEO, CFO, COO, Managing Member, General Partner, President, Vice President, or Treasurer. For nonprofits, at least one control person must be verified.
Where is KYB data collected?
Most KYB data is collected through Betterment’s Onboarding Hub via a required KYB task. Some information is initially gathered during the sales process.
What information is collected during KYB verification?
Betterment collects data in three main categories:
- Form Submitter: The individual completing the KYB process.
- Company Information: Legal name, address, EIN, incorporation details.
- Beneficial Owner/Control Person Information: Name, date of birth, residential address, Social Security number (or equivalent), and ownership percentage.
Where is KYB data stored?
All KYB-related data is stored in Betterment’s database.
How does KYB data collection impact the onboarding process?
The KYB task becomes available after the company provides initial information. Payroll cannot be run until this step is completed, making it a critical part of the onboarding process.
When is the KYB task available in the onboarding hub?
The KYB task is open and ready to complete once the Tell Us About Your Company and Add a Bank Account tasks are completed. A plan cannot complete onboarding until KYB verification is finished.
What happens if a plan fails KYB verification?
If KYB verification fails or data is incomplete, Betterment’s Operations team will manually review and resolve issues. The product does not currently include automated flows to handle failed verifications.
How does KYB data collected in onboarding relate to compliance reviews?
Any KYB data collected during onboarding is pre-filled for compliance reviews. Plan sponsors can either confirm that ownership has remained the same or update information as needed.
Does Betterment conduct annual KYB reviews?
Currently, there is no automatic annual review. However, Betterment Compliance and Operations conduct ongoing due diligence to maintain data accuracy.
Why do you need a physical address if we are a remote company?
Regulations require us to collect a physical address, even if your business is fully remote. We can be flexible, but we do need some form of physical location where your business primarily operates.
Do nonprofits need to fill out the beneficial ownership form?
Yes. While nonprofits don’t have traditional beneficial owners, a control person (such as a CEO, CFO, or Treasurer) must be identified.
How do I complete the form if our business is owned by a foreign entity?
Provide details about your parent company’s beneficial ownership, including names, birth dates, nationalities, and relevant ID details.
What if no one owns 10% or more of our company?
Even if no individual owns 10% or more, we still need information for the person who controls or directs the company.
How should LLC owners report beneficial ownership?
If an LLC owns part of your company, we need information on individual LLC owners whose stakes equate to 10% or greater ownership of your business.
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