If a fraud were to happen, are you likely to prevent or detect it?
The impact of fraud, internal or external, has been a concern since trading started. People continue to commit fraud when they see an opportunity, and have either an incentive or pressure that drives them, and are able to rationalise their behaviour.
In 2016 PwC Global Economic Crime Survey:
- 36% of the 6,337 respondents across 115 countries claimed to have experienced an economic crime within the previous year;
- Gap between internal and external fraud actor is closing. 1 in 5 respondents have never carried out a fraud risk assessment;
- Cybercrime climbs to 2nd most reported economic crime affecting 32% of organizations. Most companies are still not adequately prepared for – or even understand the risks faced: Only 37% of organizations have a cyber-incident response plan;
- 1 in 5 respondents are not aware of the existence of a formal ethics and compliance program and many are confused about who owns it internally.
- Almost half the incidents of serious economic crimes were perpetrated by internal parties;
- 1 in 5 banks have experienced enforcement actions by a regulator – failure to curb illicit business practices may lead to personal liability;
- More than a quarter of financial services firms have not conducted Anti-money Laundering (AML)/ Combatting the Financing of Terrorism (CFT) risk assessments across their global footprint; and
- Data quality cited by 33% of respondents as a significant technical challenge. Lack of experienced AML/CFT staff is a major issue.