A counterparty, from the perspective of Know Your Customer (KYC) and Know Your Business (KYB), compliance, due diligence, and sanctions screening, is any individual, organization, or entity that engages in financial transactions or business relationships with a company. This includes clients, suppliers, vendors, business partners, and other entities involved in contractual agreements or financial exchanges. 

In the realm of KYC, the counterparty's identity and background must be meticulously verified to ensure they are who they claim to be and to assess their risk profile. Compliance necessitates that all counterparties adhere to regulatory requirements, preventing engagement with those involved in illicit activities. Due diligence involves a thorough investigation into the counterparty's financial activities, business practices, and reputation to uncover any potential risks or red flags. Sanctions and screening processes are employed to ensure that counterparties are not listed on any sanctions lists or involved in activities that could pose legal or financial risks. 

This comprehensive approach when it comes to counterparties can help organizations mitigate risks, maintain regulatory compliance, and uphold the integrity of their financial and business operations.

Note that sometimes, the term "counterparty" will be used interchangeably with the term "third party". Although "third party" and "counterparty" can sometimes overlap in meaning, the former has a wider scope, encompassing all external relationships and entities beyond just direct transaction partners with whom the company interacts.