Synthetic Business Identities Are the Top Risk in Business-to-Business Relationships: Association of Certified Fraud Examiners, Thomson Reuters Report

Half of organizations plan to use more artificial intelligence in their due diligence.

AUSTIN, Texas, June 14, 2023 — The majority of businesses say it is moderately or extremely challenging to bring on new vendors or business customers because of concerns over business-to-business (B2B) fraud.  The Association of Certified Fraud Examiners (ACFE) and Thomson Reuters today jointly released Combatting Business-to-Business Fraud: Benchmarking Report, in advance of the 34th Annual ACFE Global Fraud Conference, which takes place this week in Seattle and online. The report examines the risks and controls related to organizations’ business-to-business (B2B) transactions and offers companies a framework to prevent potential fraud while conducting their own B2B transactions.

Key findings of the report:

• Survey respondents said synthetic identities/businesses and potential fines or regulatory actions are their organization’s top two fraud-related risks when onboarding a business customer or vendor.

• Sixty-one percent of organizations say onboarding a new vendor is moderately or extremely challenging, fifty-two percent say the same about onboarding a new customer. Fewer than one in seven organizations say that it’s not challenging at all to bring on a new vendor or customers.

• The most collected sources of information from businesses as part of the onboarding process are tax ID numbers and ownership information – both of which can help ease organizations’ fraud-related concerns. 

• Survey respondents noted sanctions as the highest-priority risk factor when risk-ranking a new business customer or vendor.

• More than half of organizations plan to use more artificial intelligence/machine learning as part of their Know Your Business (KYB) and Know Your Vendor (KYV) due diligence processes in the coming years.

"We know that transacting with other organizations as customers or vendors presents different fraud risks than other types of business relationships," said Andi McNeal, CFE, CPA, Vice President of Education at the ACFE. "Being able to effectively recognize, assess and manage those risks is a vital part of a comprehensive anti-fraud program."

"This report features the urgent need for faster, more accurate due diligence in the B2B sector. With AI moving mainstream, the speed at which bad actors can create synthetic businesses is alarming," said Dori Buckethal, Vice President, Thomson Reuters Risk & Fraud Solutions.

The report contains data from a survey conducted of ACFE members from around the world in February and March 2023. Most of the survey’s respondents work in the internal audit and compliance/ethics functions of their organizations, with banking/financial services and manufacturing being the industries most represented.

The report examines:

• Top risks organizations face when onboarding a new business customer or vendor

• Information commonly collected as part of the onboarding process

• Top risk factors when assessing a new business

• Onboarding approaches

• Know-your-business (KYB) and know-your-vendor (KYV) due diligence processes

About the ACFE

Founded in 1988 by Dr. Joseph T. Wells, CFE, CPA, the ACFE is the world’s largest anti-fraud organization. Together with more than 90,000 members, the ACFE works to reduce business fraud worldwide and inspire public confidence in the integrity and objectivity within the profession. For more information, visit ACFE.com. 

About Thomson Reuters

Thomson Reuters (NYSE / TSX: TRI) (“TR”) informs the way forward by bringing together the trusted content and technology that people and organizations need to make the right decisions. The company serves professionals across legal, tax, accounting, compliance, government, and media. Its products combine highly specialized software and insights to empower professionals with the data, intelligence, and solutions needed to make informed decisions, and to help institutions in their pursuit of justice, truth, and transparency. Reuters, part of Thomson Reuters, is the world’s leading provider of trusted journalism and news. For more information, visit tr.com.