Imagine onboarding a new corporate client without fully understanding their ownership structure or legitimacy. For UK law firms, this isn’t just a compliance risk—it’s a potential gateway to money laundering, fraud, or reputational damage. That’s where Know Your Business (KYB) comes in.

KYB, known to most law firms as corporate client due diligence (CDD), ensures transparency by verifying a company’s details, ownership, and business legitimacy. It’s a critical part of compliance under the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR).

This article dives into what KYB/Corporate CDD means, why it matters, and how law firms can use it to enhance compliance and protect their reputation.

What is KYB?

Corporate CDD, or KYB as it's known by other businesses, is the process of verifying a company’s identity, ownership structure, and legitimacy. 

To conduct Corporate CDD checks, law firms must gather and verify specific details about a business, including:

• Registered Name: Confirm the company’s official name as listed with regulatory bodies.
• Registered Address: Identify the company’s primary address and verify any additional locations used for operations.
• Company/Registration Number: Validate the business’s unique registration number to confirm its legitimacy.
• Directors and Beneficial Owners: Understand the people behind the business, including those with significant control (ownership of more than 25% of shares). Gather supporting documentation to verify beneficial owners’ identities.
• The law to which the company is subject: Confirm the legal framework and laws governing the company.

These checks help law firms comply with the MLR, while they also protect firms from entering high-risk relationships with illegitimate or fraudulent entities.

Corporate CDD is vital for law firms that work with corporate clients, especially in cases involving complex structures or businesses operating in greater-risk industries. By identifying and verifying essential business information, corporate CDD ensures transparency and safeguards both clients and the firm from legal and reputational risks.

How Corporate CDD Checks Work

The corporate CDD process begins with gathering and verifying fundamental business information. Law firms typically start by checking official sources like Companies House to confirm basic registration details, company structure, and filing history. This includes verifying the company's registered address, incorporation date, and current status. Firms must also identify and verify beneficial owners—those who own or control more than 25% of the business—by examining ownership documentation.

Law firms assess the risk level of their clients based on various factors, such as the industry, jurisdiction, and ownership structure. Businesses operating in higher-risk sectors or regions undergo closer scrutiny. This is because they're more likely to be targeted for financial crimes such as money laundering. 

To evaluate these risks, firms analyse the client’s business activities, ownership structure, transaction patterns and verify the source of funds. When a client’s risk profile warrants further investigation, law firms conduct Enhanced Due Diligence (EDD). Often, this requires screening against databases for politically exposed persons (PEPs) and conducting adverse media checks to identify red flags. A robust risk assessment enables law firms to allocate resources effectively and maintain compliance.

The corporate CDD process doesn’t end after the initial client assessment. UK law firms are also required to conduct ongoing monitoring of their clients to ensure continued compliance with legal and regulatory obligations. Corporate clients can be more challenging to monitor than individual clients because their data can change frequently and without any notice.

The Challenges of Manual CDD Checks

Law firms have traditionally conducted due diligence checks manually. However, this creates significant bottlenecks during the client onboarding process.

Verifying identity documents, cross-referencing company information, and screening for PEPs are incredibly time-consuming. Manual processes are also prone to human error, potentially exposing firms to compliance issues and regulatory penalties.

Ongoing monitoring requires regular reviews of client information and risk assessments, which demand considerable time and resources when handled manually. This approach becomes increasingly unsustainable as firms grow, leading to delays in client service, frustrated fee earners, and potential revenue loss from prolonged onboarding times. Frustratingly, firms often end up checking for changes that haven’t even happened.

Thankfully, this is where technology can help.

How Technology Simplifies Corporate CDD for Law Firms

Technology has revolutionised corporate CDD for UK law firms. Modern corporate CDD platforms streamline verification by connecting to multiple data sources, including public records and company registries. These systems pull in data from a wide range of sources to create a complete picture of a company's ownership, financial status, and risk profile. This allows firms to confirm company details in real-time rather than spending hours on manual checks.

Corporate CDD tools automatically flags high-risk businesses and PEPs, while maintaining detailed audit trails that ensure compliance with UK AML regulations. Perhaps most importantly, modern Corporate CDD solutions provide continuous monitoring capabilities, alerting firms to changes in ownership, adverse media, or regulatory status.

Best Practices for Corporate CDD in Law Firms

Implementing effective corporate CDD checks requires a strategic approach. By following these best practices, law firms can streamline compliance, reduce risks, and strengthen client relationships.

Centralise Data Management

Consolidate all client and business data in a single, secure system for easy access and management. This reduces duplication and boosts efficiency. It also ensures records are well-organised and readily accessible for regulatory reviews or updates.

Prioritise Ongoing Monitoring

KYB doesn’t stop at onboarding—ongoing monitoring is essential to stay informed about changes in your clients’ circumstances. Track changes in ownership, regularly updating records to reflect shifts in ownership, directors, or beneficial owners. Remember to monitor potential risks on the horizon. Keep an eye on adverse media, sanctions, or regulatory changes that may affect the company’s status.

Train Your Team

Equip your team with the knowledge and tools required to execute successful Corporate CDD processes effectively. Provide regular training to ensure staff are up to date on the latest regulations. Ask for their feedback on how to improve the processes, or which tools might make their lives easier.

Leverage Technology

Automate repetitive tasks and streamline workflows with modern Corporate CDD platforms. Look for tools that can speed up identity verification, beneficial ownership checks, and ongoing monitoring processes.

How Legl Helps Law Firms Manage Corporate CDD

Legl’s platform transforms Corporate CDD processes for law firms—here’s how it works.

• Automated Verification: Legl provides instant access to corporate structures, directors, shareholders, and credit information for businesses across over 160 countries. This enables real-time verification, reducing delays and ensuring thorough due diligence.
• Ongoing Monitoring: The platform continuously tracks changes in company details, ownership structures, and risks like PEPs, sanctions, or adverse media. Regular updates help law firms stay compliant and informed.
• Comprehensive Reporting: Legl generates detailed company reports, including financial history, credit ratings, and group structures. These holistic insights allow law firms to assess risk and make informed decisions.
• Enhanced Client Experience: By automating KYB checks, Legl reduces the manual effort required during onboarding. This accelerates processes, improves communication, and enhances the overall client experience.

By leveraging Legl’s Corporate CDD tools, law firms can minimise risks, save time, and maintain compliance.

Final Thoughts

Gone are the days when corporate due diligence meant mountains of paperwork and endless manual checks. Smart firms now leverage technology to transform Corporate CDD from a regulatory burden into a business advantage. The right tools don't just ensure compliance—they strengthen client relationships and protect your firm's reputation while saving valuable time and resources.

Want to see how Legl can revolutionise your firm's approach to Corporate CDD? Book a demo today and discover why leading firms trust our platform.