combatting

business-to-business fraud:
Benchmarking Report
 TABLE OF CONTENTS
3 Introduction

4 Challenge Level with Onboarding New Businesses

5 Effectiveness of Onboarding Program

6 Time to Onboard a New Business

7 Top Risks When Onboarding a New Business

11 Information Collected as Part of Onboarding

13 Top Risk Factors When Assessing a New Business

16 Onboarding Approaches

19 KYB and KYV Due Diligence Processes

22 Respondent Demographics

2 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 INTRODUCTION

C
onducting business with other organizations as customers and vendors presents unique
fraud considerations. From synthetic business identities to cybercrime to theft of services,
the risks of transacting with other businesses can be significant. Consequently, an effective
program to vet and onboard new business customers and vendors is a critical component of a
comprehensive fraud risk management program.

To help organizations have visibility into these risks and benchmark their own processes for
screening and onboarding other businesses, the ACFE and Thomson Reuters partnered on a study
to explore the risks and controls related to business-to-business transactions and relationships.
During February and March 2023, we sent a survey to ACFE members in select roles and
industries to find out about their organizations’ know-your-vendor (KYV) and know-your-business
(KYB) processes. We received 466 responses, 183 of which were usable for purposes of our study.
The findings presented in this report are based on those 183 responses.

On behalf of the ACFE and Thomson Reuters, we thank all the survey participants for contributing
to this study. We hope the resulting information provided in this report is useful for organizations
and anti-fraud professionals around the world in building and strengthening programs to guard
against fraud risks from customer and vendor relationships with other businesses.

COMBATTING BUSINESS-TO-BUSINESS FRAUD 3

 CHALLENGE LEVEL
WITH ONBOARDING
NEW BUSINESSES
O
nboarding a new business as a customer or vendor can be challenging for many
organizations. As shown in Figure 1, only 10% of organizations see new vendor
onboarding as not challenging at all, while more than 60% find onboarding new
vendors to be extremely or moderately challenging. Likewise, 52% say onboarding a
new business customer is extremely or moderately challenging, and 14% do not find new
customer onboarding to be a challenge to their organizations.

figure 1
How
Howchallenging
challenging is is it for
it for youyou
to to
onboard
onboard a newbusiness
a new business as aas
...?a ...?

Customer 11% 41% 34% 14%

Vendor 8% 53% 29% 10%

Extremely Moderately Slightly Not at all

challenging challenging challenging challenging

4 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 EFFECTIVENESS
OF ONBOARDING
PROGRAM
A
s shown in Figure 2, most organizations’ programs are at least moderately effective
in onboarding new businesses as customers or vendors. Only 5% of respondents
indicated that their organizations’ onboarding programs are not at all effective, while
87% said that their programs were moderately, very, or extremely effective.

figure 2
In your opinion, how effective is your organization’s program
In your opinion, how effective is your organization’s program
forfor
screening
screeningand
andonboarding newbusinesses
onboarding new businessesasasa ...?
a ...?

Customer 13% 34% 40% 9% 5%

Vendor 10% 29% 48% 8% 5%

Extremely Very Moderately Minimally Not

effective effective effective effective effective

COMBATTING BUSINESS-TO-BUSINESS FRAUD 5

 TIME TO
ONBOARD A
NEW BUSINESS
W
e asked respondents how long it typically takes organizations to onboard new
business customers and vendors. Figure 3 shows that the process for vendors is
usually lengthier, with more than half (53%) of organizations taking longer than 1 week
to onboard a new vendor and 40% taking that much time to onboard a new customer.

figure 3
How How
longchallenging
does it typically
is it fortake
you your
to onboard
organization a new business
to onboard as a ...? as a ...?
a new business

Customer Vendor
37%

24%

16% 16% 16% 16%

14% 13%
12% 12%
10%
6%
4% 4%

Less than 1 to 4 hours 5 hours 2 to 3 days 4 days 1 week More than

1 hour to 1 day to 1 week to 1 month 1 month
(fully automated)

6 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 TOP RISKS WHEN
ONBOARDING
A NEW BUSINESS
T
ransacting with other businesses as customers and vendors involves specific and
notable risks that organizations must be aware of and protect against. Screening and
onboarding procedures are typically designed to evaluate and manage these risks.

FRAUD-RELATED RISKS
We asked respondents to rank-order several specific fraud-related risks pertaining to their
business customers and vendors. Figure 4 provides a heat-map summary of these responses,
while Figures 5 and 6 reflect the proportion of respondents that ranked each risk within each
numeric category (i.e., 1–8 for customer risks and 1–6 for vendor risks). As these figures show,
the top two risks for both customers and vendors are synthetic identities/businesses and
potential fines or regulatory action. The priority focus on these risks reinforces the need for
strong due diligence processes around business ownership and sanctions.

In contrast, risks related to theft of services and intellectual property, and to loss of property
or other potential business are ranked much lower on organizations’ risk priorities when
evaluating and onboarding new businesses.

COMBATTING BUSINESS-TO-BUSINESS FRAUD 7

 figure 4
Fraud risk

Customer Vendor
risk rank risk rank Fraud Concern
1 2 Synthetic identity/business or fake relationship
2 1 Fines/regulatory action
3 Creditworthiness
4 3 Cybercrime event(s)
5 Fraudulent account opening
6 5 Theft of services
7 4 Loss of property or other potential businesses
8 6 Intellectual property theft

figure 5
When onboarding a new business customer,
When onboarding a new business customer,
whatare
what areyour
your top
top fraud-related
fraud-related concerns?
concerns?

1 2 3 4 5 6 7 8
Most Least
significant significant
concern concern

35% 35% 35% 35%

30 30 30 30
25 25 25 25
20 20 20 20
15 15 15 15
10 10 10 10
5 5 5 5
0 0 0 0
Synthetic identity or fake Fines/ Creditworthiness Cybercrime
business relationship regulatory action event(s)

35% 35% 35% 35%

30 30 30 30
25 25 25 25
20 20 20 20
15 15 15 15
10 10 10 10
5 5 5 5
0 0 0 0
Fraudulent account Theft of Loss of property or Intellectual
opening services other potential property theft
business

8 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 figure 6
When
When onboardinga anew
onboarding newbusiness
businessvendor,
vendor,
what
what areare your
your topfraud-related
top fraud-relatedconcerns?
concerns?

1 2 3 4 5 6
Most Least
significant significant
concern concern

35% 35% 35% 35%

30 30 30 30
25 25 25 25
20 20 20 20
15 15 15 15
10 10 10 10
5 5 5 5
0 0 0 0
Fines/ Synthetic Cybercrime Theft of
regulatory action businesses event(s) services

35% 35%
30 30
25 25
20 20
15 15
10 10
5 5
0 0
Loss of property or Intellectual
other potential property theft
business

REPUTATIONAL CONCERNS
We also asked about the top reputational risks faced by organizations when onboarding and
transacting with business customers and vendors. As shown in Figures 7–9, the top reputational
concern involves controversial business practices (e.g., compliance failures, sanctions violations,
questionable sourcing practices, or other ethical concerns), followed by environmental factors.

figure 7
Reputational risk
Customer Vendor Reputational Concern
risk rank risk rank

1 1 Controversial business practices

2 2 Environmental factors
3 4 Diversity, equity, and inclusion or employment practices
4 3 Forced labor

COMBATTING BUSINESS-TO-BUSINESS FRAUD 9

 figure 8

When onboarding a new business customer,

what are your top reputational concerns?
When onboarding a new business customer,
what are your top reputational concerns?

1 2 3 4
Most Least
significant significant
concern concern

80% 80% 80% 80%

70 70 70 70
60 60 60 60
50 50 50 50
40 40 40 40
30 30 30 30
20 20 20 20
10 10 10 10
0 0 0 0
Controversial Environmental Diversity, equity, and Forced
business practices factors inclusion or labor
employment practices

figure 9
When onboarding
When onboarding aanew
newbusiness
businessvendor,
vendor,
what are your top reputational concerns?
what are your top reputational concerns?

1 2 3 4
Most Least
significant significant
concern concern

80% 80% 80% 80%

70 70 70 70
60 60 60 60
50 50 50 50
40 40 40 40
30 30 30 30
20 20 20 20
10 10 10 10
0 0 0 0
Controversial Environmental Diversity, equity, and Forced
business practices factors inclusion or labor
employment practices

10 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 INFORMATION
COLLECTED AS PART
OF ONBOARDING
W
hen screening and onboarding a new business customer or vendor, most
organizations collect key pieces of information to assess the business they are
planning to transact with. The most common information collected is the business’s
tax ID number, followed by ownership information (both ID verification of the business
owners and ultimate beneficial ownership information) and sanctions/watchlist/denied-
party information. Screening this information ties closely to the top fraud-related risks that
organizations are concerned about when transacting with business customers and vendors
(see the “Fraud-Related Risks” section on page 7–8).

While the information collected does not vary widely between customer and vendor
screening processes, some data (e.g., corporate filing history, bankruptcy history, and
ultimate beneficial ownership) is more commonly collected for potential business vendors,
while ID verification of business owners is used by more organizations when onboarding new
business customers.

COMBATTING BUSINESS-TO-BUSINESS FRAUD 11

 figure 10

What information does your organization

What and/or
collect information
verifydoes your
as part of organization
onboarding a
newverify
collect and/or business as aof...?
as part onboarding a
new business as a ...?

Customer Vendor

86%
Tax ID number
84%

77%
ID verification of business owner(s)
68%

Sanctions/watchlist/denied-party screening 73%

76%

Ultimate beneficial ownership 72%

79%

Business industry information (e.g., NAICS Code) 71%

68%

61%
Corporate filing history
71%

Adverse/negative news 59%

61%

Criminal records check of business owner(s) 54%

55%

Bankruptcy history 51%

59%

Liens and judgments 45%

46%

Other 11%
9%

12 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 TOP RISK FACTORS
WHEN ASSESSING A
NEW BUSINESS
W
hen evaluating and onboarding new business customers and vendors,
organizations must consider numerous factors regarding how much risk is
involved in this new business relationship. We asked respondents whether their
organizations consider certain risk factors a high priority, medium priority, or low priority
when making these assessments; the results are reflected in Figures 11 and 12. For both
customers and vendors, sanctions rated as the top risk factor, with more than three-quarters
of organizations considering sanctions as a high priority when screening new businesses.
Being in a high-risk industry or having a history of civil or criminal litigation are also risk
factors that are commonly considered a high priority for both customers and vendors.

COMBATTING BUSINESS-TO-BUSINESS FRAUD 13

 figure 11

HowHow does
does your
your organization
organization prioritize
prioritize thethe following
following
factors when risk-ranking a new business customer?
factors when risk-ranking a new business customer?

Sanctions 75% 20% 5%

High-risk industry 65% 28% 7%

High-risk jurisdiction/geography 63% 24% 13%

Civil/criminal litigation history 61% 28% 11%

PEP involvement 60% 24% 16%

Lending/financial exposure 53% 34% 13%

Account history/credit history 53% 33% 14%

Foreign beneficial ownership 55% 27% 18%

Adverse media/negative news 48% 33% 19%

Executive/leadership risk factors 43% 42% 15%

Liens and judgments 39% 40% 21%

High priority Medium priority Low priority

14 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 figure 12

How
How does
does your
your organization
organization prioritize
prioritize the the following
following
factors when risk-ranking a new business
factors when risk-ranking a new business vendor? vendor?

Sanctions 78% 14% 8%

Civil/criminal litigation history 68% 22% 10%

High-risk industry 65% 26% 9%

PEP involvement 58% 32% 10%

Adverse media/negative news 58% 29% 13%

High-risk jurisdiction/geography 56% 32% 12%

Executive/leadership risk factors 51% 36% 13%

Lending/financial exposure 51% 33% 16%

Account history/credit history 51% 35% 14%

Foreign financial ownership 49% 32% 19%

Liens and judgments 46% 35% 19%

High priority Medium priority Low priority

COMBATTING BUSINESS-TO-BUSINESS FRAUD 15

 ONBOARDING
APPROACHES

T
wo key aspects of assessing and onboarding new business customers and vendors involve determining
beneficial ownership and conducting sanctions screening. Both of these considerations tie back directly
to the top fraud-related risks that organizations face when transacting with other businesses (see the
“Fraud-Related Risks” section on page 7–8). As noted in Figures 13 and 14, the same approaches can be used
to conduct both of these screening processes, providing some efficiency in the onboarding process. However,
for both new customers and vendors, information provided directly from the business is much more commonly
used for determining beneficial ownership than conducting sanctions screening. Other common onboarding
approaches include using a third-party data provider and conducting open-source internet research.

16 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 figure 13
When onboarding a newa business
When onboarding customer,
new business which
customer, whichof
ofthe
the
following approaches
following doesdoes
approaches youryour
organization
organizationuse
usefor
for...?
...?

Determining beneficial ownership

Conducting sanctions screening

81%
Customer-supplied information
52%

71%
Third-party data provider
72%

59%
Open-source internet search
52%

50%
Basic Google or other general web searches
40%

40%
Outsourced due diligence/managed service provider
39%

6%
Other
7%

1%
None of the above
7%

COMBATTING BUSINESS-TO-BUSINESS FRAUD 17

 figure 14
When onboarding a newa new
When onboarding business vendor,
business which
vendor, whichofofthe
the
following approaches
following doesdoes
approaches youryour
organization
organizationuse
usefor
for ...?
...?

Determining beneficial ownership

Conducting sanctions screening

82%
Vendor-supplied information
58%

70%
Third-party data provider
68%

61%
Open-source internet search
59%

50%
Basic Google or other general web searches
43%

44%
Outsourced due diligence/managed service provider
45%

11%
Other
6%

2%
None of the above
4%

18 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 KYB AND KYV
DUE DILIGENCE
PROCESSES
A
s part of conducting due diligence into relationships with third-party businesses, several know-your-
business (KYB) and know-your-vendor (KYV) processes can be beneficial in both onboarding new
business customers and vendors and in monitoring existing relationships with other businesses. As
shown in Figures 15 and 16, for both business customers and vendors, the due diligence processes that
are currently used by the most organizations are ongoing business account monitoring, adverse media
screening, and automated sanctions screening—though the frequency of these processes differs based
on whether the business will be a customer or a vendor. In addition, the two areas that appear to have the
most expected growth are the use of artificial intelligence/machine learning and the use of consortium data.
While most organizations are not yet using these approaches, more than 40% of organizations expect to
adopt them for onboarding new customers and vendors at some point in the future.

COMBATTING BUSINESS-TO-BUSINESS FRAUD 19

 figure 15
What KYB (know-your-business) due diligence processes does your
organization currently employ and/or expect to adopt for onboarding
What KYB (know-your-business) due diligence processes does your organization
new business
currently employcustomers
and/or expectortomonitoring existing
adopt for onboarding newbusiness customers?
business customers
or monitoring existing business customers?

Currently use
Do not currently use but expect to adopt within 2 years
Do not currently use but expect to adopt in more than 2 years
from now or at some uncertain future time
Do not currently use and do NOT expect to adopt in the future

Ongoing business Adverse media Automated Peer-information

account monitoring screening sanctions screening sharing

6% 10% 8% 9%
8%
12% 12% 12%
12%
8% 61%
16% 64% 18%
74% 70%

Automated Consortium data Supply chain Artificial intelligence/

risk scoring mapping machine learning solutions

11% 11% 18% 18%

12% 27%
21% 46% 43%
55% 14%
28%
23%
26%
22% 24%

20 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 figure 16
What KYV (know-your-vendor) due diligence process does your
organization currently employ
What KYV (know-your-vendor) and/orprocesses
due diligence expect to adopt
does for onboarding
your organization
new business vendors or monitoring existing businessvendors
currently employ and/or expect to adopt for onboarding new business vendors?
or
monitoring existing business vendors?

Currently use
Do not currently use but expect to adopt within 2 years
Do not currently use but expect to adopt in more than 2 years
from now or at some uncertain future time
Do not currently use and do NOT expect to adopt in the future

Automated Adverse media Ongoing business Peer-information

sanctions screening screening account monitoring sharing

7% 10% 5%
12% 18%
11%
13%
11% 10%
9% 18% 16% 54%
68% 65%
70%
23%
12%

Automated risk Supply chain Artificial intelligence/

scoring mapping Consortium data machine learning solutions

11% 16% 17% 20%

26%
15% 39%
50% 16% 49%
26%
29% 26%
23%
18% 18%

COMBATTING BUSINESS-TO-BUSINESS FRAUD 21

 RESPONDENT
DEMOGRAPHICS

PROFESSIONAL EXPERIENCE

S
urvey respondents had an average of 19 years of professional experience, with 22% having
10 years or less of experience, 41% having between 11 and 20 years’ experience, and 37%
having more than 20 years’ experience.

figure 17
Respondents’ Years
Respondents’ Yearsof Professional
of Professional Experience
Experience

Less than
5 years
3%

5 to 10 years
More than 19%
20 years
37%

11 to 20 years
41%

22 COMBATTING BUSINESS-TO-BUSINESS FRAUD

DEPARTMENT
The most common department represented by survey respondents was internal audit; 37%
of participants worked in this function. The next most common was the compliance or ethics
department, with 21% of respondents.

figure 18
Respondents’ Department
Respondents’ Department

Internal audit 37%

Compliance/ethics 21%

Risk/controls 10%

Executive/upper management 10%

Corporate security/investigations 10%

Other 6%

Legal 4%

Accounting/finance 3%

COMBATTING BUSINESS-TO-BUSINESS FRAUD 23

 INDUSTRY
The banking and financial services industry was the most common in our survey, with 26% of
respondents working for an organization in this category. Manufacturing (13%) and government and
public administration (7%) were the next most common industries. The remaining 54% of survey
respondents were split among many other industries.

figure 19
Respondents’ Industry
Respondents’ Industry

Banking and financial services 26%

Manufacturing 13%
Other 7%
Government and public administration 7%
Services—professional, scientific, and technical 6%
Technology 5%
Energy 5%
Transportation and warehousing 4%
Services—other 4%
Agriculture, forestry, fishing, and hunting 4%
Retail 3%
Religious, charitable, or social services 3%
Insurance 3%
Health care 3%
Education 3%
Wholesale trade 2%
Mining 2%
Real estate 1%
Information 1%
Construction 1%

24 COMBATTING BUSINESS-TO-BUSINESS FRAUD

 REGION
Survey respondents came from all over the world, providing a global view into how organizations
manage the risks related to business customers and vendors. Just over one-third (35%) of
respondents work for organizations that are headquartered in the United States or Canada, with
another 23% working for organizations in Sub-Saharan Africa and 19% in Western Europe.

figure 20

Respondents’ Region
Respondents’ Region

Eastern Europe and

U.S. and Canada Western/Central Asia
Western Europe
35% 2%
19%

2%
Asia-Pacific

6% 6%
Middle
Sub-Saharan East Southern
Africa and Asia
Latin America North
and the Caribbean 23% Africa
7%

COMBATTING BUSINESS-TO-BUSINESS FRAUD 25

 ABOUT THE ACFE

F
ounded in 1988 by Dr. Joseph T. Wells, CFE, CPA, the Association
of Certified Fraud Examiners (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.

The ACFE offers its members the opportunity for professional certification.
The Certified Fraud Examiner (CFE) credential is preferred by businesses
and government entities around the world and indicates expertise in fraud
prevention and detection. To learn more, visit ACFE.com.

26 COMBATTING BUSINESS-TO-BUSINESS FRAUD

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COMBATTING BUSINESS-TO-BUSINESS FRAUD 27

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