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To be precise, the Security Council itself is not the one with the veto. Each of the five permanent members of the Security Council has a veto over anything that is proposed in the Security Council.
After WWII, the Security Council was set up and all five of the supposedly "major" members of the Allies (the countries that won WWII) were made permeanent members of the Council. These were the US, Britain, France, the USSR, and China.
Anytime something is proposed to the Security Council (say increased sanctions against Iran) any of these 5 countries can block the proposal from happening by vetoing it.
All decisions taken by the United Nations are on matters classified as either procedural or substantive. Each of them has to be ratified by the Security council.
The United Nation's Security council consists of 15 members nations. Five of them have a permanent membership and they include the US, the UK, China, France and the Russian Federation. The other members of the Security council are non-permanent and are elected for a term of two years by the members of the General Council.
Draft resolutions pertaining to procedural matters only need 9 affirmative votes by any of the 15 members of the security council to be passed. Those involving substantive matters on the other hand require 9 affirmative votes by any of the 15 member nations, as well as no negative vote by any of the five permanent members. If any of the permanent members casts a negative vote, the draft resolution being ratified cannot be accepted. This special privilege given to the five permanent members is called the veto power. It ensures any decision taken on substantive matters has the approval of all the permanent members.
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