How to mitigate the risks with high-risk business partners

Investigations Insider | When you are a global organization operating in major markets around the world

Jeffrey Garfield

Jeffrey Garfield

Principal, Advisory, KPMG US

+1 317-616-2520

When you are a global organization operating in major markets around the world, you need third-party business partners to represent you and, at times, conduct business on your behalf. These third-party organizations – sales agents, distributors, logistics services – play an important role in keeping your business wheels turning.

But sharing a business process or customer relationships with a third-party business partner also means sharing risk. If your partner fails to adhere to a regulatory requirement or, worse, breaks the law, your company can be held accountable.

And unfortunately, partners in high-risk markets often pose greater risks than those in lower-risk jurisdictions. In fact, the vast majority of enforcement actions that KPMG sees are related to third parties operating outside of the United States. In some areas of the world, for instance, gift-giving and faciliation payments among business associates are customary and may not always be accurately recorded in the financial records. This could be problematic if an external regulator asks your company to substantiate its activities and transactions. If the recipient of the gift or facilitation payment was a public or government employee, your company could be drawn into a bribery allegation or inquiry. 

Sometimes the third party’s risky conduct can be even more egregious. Some third parties, under pressure to meet sales quotas, might go so far as to produce false invoices and purchase orders, making it look like they have sold a product when they did not actually do so. We’ve seen cases in which corrupt third parties set up fictitious “partner” companies to make it look like they are providing a business service to a larger company when their real goal is to divert money illegally to a close associate or to themselves.

Fortunately, the KPMG On-Call Investigations team has the tools and experience to uncover these types of fraudulent activities. We combine investigative acumen with enhanced technology solutions. When we launch an investigation into potential misconduct by third-party business partners, we take the time to gather as much transactional data from our client as possible. Our initial goal is to identify transactions that could be risky. This includes using data analysis to identify any trends, anomalies, or patterns that may be leading indicators of risk.

Then, we gather corresponding data from the third-party business partner, comparing those data sets with your own data to uncover patterns of fraud, waste or abuse. Through interviews, we can obtain further information to substantiate issues that the data analyses may already be highlighting.

Increasingly, we also utilize open-source data generated by social media platforms. Employees are becoming increasingly more outspoken on social media about issues they identify within their organizations. This often includes speaking out about issues at their employer they may consider unjust or even illegal.

We are able to follow those open-source data “breadcrumbs” as we conduct an investigation, and it often leads us to evidence of wrongdoing. By combining this open-source data with the information we gather in our investigation from the company’s data, the third party’s data, and interviews, we can identify patterns for further investigation. In this way, the combination of structured and unstructured data bolsters our investigation.

There can be numerous benefits of this approach for our client. Gathering data from multiple sources jumpstarts our investigation and enables us to quickly analyze activities that we can then substantiate. When a potential crisis is developing, moving quickly and efficiently is always an advantage.


  • Enforcement actions for companies are often tied to third-party sales agents, distributors or logistics providers, especially in markets outside the U.S.
  • Working with clients, we are able to examine these issues with a combination of investigative skills and technology.
  • Leveraging data and analytics and our cumulative experience, we can conduct these investigations quickly and efficiently, saving our clients time and money and mitigating risks for our clients.

On-Call Investigation Services

Fraud allegations require a swift response and skilled resources. When fraud occurs in a global setting, it is essential to perform a thorough investigation.

Fraud allegations require a swift response and skilled resources. When fraud occurs in a global setting, it is essential to perform a thorough investigation.