How to Use Personal and Tax Identifiers in KYC and KYB

A valid Tax ID is not enough, on its own, to approve an individual or business. In KYC and KYB, personal and tax identifiers help organizations compare submitted information against official sources, detect inconsistencies, and document part of the verification process.

This guide explains what each type of identifier can verify, where its limitations lie in relation to AML, and how these checks can be integrated via API into an onboarding flow.

TL;DR:

• KYC verifies individuals; KYB verifies businesses and the people connected to them.
• Personal and tax identifiers help validate information against official sources, but their scope varies by country and service.
• Validating a Tax ID does not replace a complete AML or due diligence process: it does not, by itself, confirm beneficial owners, authorized representatives, or risk profiles.
• Integrating these checks via API can automate verification, flag discrepancies, and support rules for proceeding, requesting corrections, or sending cases for review.

KYC (Know Your Customer) is the process of identifying and verifying an individual who applies for a financial product or service. Depending on the applicable regulation and risk level, it may include collecting and verifying personal information, identity documents, address details, and other required data.

For example, when someone applies for a digital loan, the financial institution needs to verify that the information belongs to the applicant and that it has sufficient data to proceed.

KYB (Know Your Business) applies the same principle to companies and other legal entities. In addition to identifying the entity itself, KYB may require verifying its incorporation, legal name, authorized representatives, ownership structure, and beneficial owners.

A platform onboarding merchants into its payment network, for example, needs to know which legal entity it is contracting with and who is authorized to act on its behalf.

The difference between KYC and KYB becomes clearer when looking at the information being verified:

The RUT is a useful example of why local context matters. In Chile, the RUT is the tax identification number used for individuals and entities. In Colombia, however, RUT refers to DIAN’s tax registry, while the taxpayer identification number recorded in that registry is the NIT.

Three Levels of Verification

Knowing which identifier applies is the first step. The next is deciding how deeply that identifier needs to be validated.

For example, Mexico’s SAT provides a service to check whether an RFC is valid or invalid. In Brazil, Receita Federal allows users to check the registration status of a CPF and obtain proof of registration and registration status for a CNPJ.

Each result is meaningful only within its specific scope. A CPF with a regular registration status, for example, does not prove the holder’s financial capacity, complete tax situation, or risk profile.

A Tax ID connects the information submitted by an individual or business with tax records when an available official source supports that lookup.

It can add value at five points in the verification process.

1. Identify the Subject Correctly

Two companies may have similar trade names. A tax identifier helps distinguish between them and reduces the risk of associating information with the wrong legal entity.

2. Compare Submitted Information

With a legal name and tax identifier, a platform can query the available data and check for discrepancies.

A mismatch may result from a data-entry error, an outdated record, or inconsistent information. It should be assessed before a decision is made.

3. Access Registry Information

Depending on the authority and type of access, a lookup may return registration information, tax status, legal name, or other taxpayer attributes.

In Chile, for example, the Servicio de Impuestos Internos provides a third-party tax status lookup that can identify certain alerts associated with a taxpayer.

4. Keep Information Consistent

The Tax ID can act as a reference point for linking records, queries, and updates associated with the same individual or entity.

This helps identify duplicate records and maintain traceability across verification activities.

5. Support Onboarding Decisions

Verification results can feed internal rules: proceed, request a correction, ask for additional documentation, or send the case for review.

Validation provides evidence for the decision-making process. It does not, by itself, determine whether a customer or business relationship should be approved.

Confirming that an identifier is registered answers a specific question about that data point. Anti-money laundering controls require more.

The Financial Action Task Force (FATF) Recommendations include customer due diligence measures such as identifying and verifying customers, identifying beneficial owners, and conducting ongoing monitoring of the business relationship.

AML (Anti-Money Laundering) covers the policies and controls used to prevent and detect money laundering and related financial risks. For a broader overview, see our guide to what AML is.

In practice, KYC, KYB, and AML answer different questions:

A company may have a registered tax identifier and still present signals that require additional due diligence.

Likewise, a discrepancy in an official record may result from an administrative error rather than fraud. The value comes from combining the appropriate checks and maintaining evidence of how each decision was made.

An API can incorporate identity and tax-data checks directly into a registration or onboarding flow, eliminating the need for users or analysts to manually search government portals for every case.

The following steps describe good practices for a verification workflow. Each team should adapt them to its internal rules, organizing the process around the data being verified and what each source can actually return.

Two points are particularly important.

First, a tax-record lookup is not equivalent to a complete identity verification.

Second, different results should trigger different actions. A discrepancy may require a correction. A record that cannot be found may require review. A failed query caused by a technical issue should trigger a retry rather than an automatic rejection.

Automation should also include appropriate access controls, personal-data handling, and retention policies. This helps keep onboarding processes consistent while allowing verification requirements to adapt to each market.

Validating a Tax ID in KYC and KYB provides evidence from official sources, but its value is greater when it forms part of a broader assessment.

The operational challenge grows when companies expand across markets: each country has its own identifiers, government agencies, documents, and lookup mechanisms.

Prometeo Tax ID Validation provides access through a single integration to official identity and tax-data sources across different Latin American markets. Available checks include CURP through RENAPO in Mexico, CPF and CNPJ in Brazil, RUT in Chile, and services associated with DIAN in Colombia. The specific data and documents available vary by country and service.

The service can be accessed via API or through a no-code dashboard. Instead of checking each government portal separately, teams can work with standardized information and incorporate the results into their own verification policies.

A validated identifier provides information. Turning that information into a better onboarding decision is what makes the difference.

Learn more about Tax ID Verification and book a demo.