Better fraud defences needed

Economic fraudsters may be ‘winning the war’ in Thailand, PwC survey shows

Adecrease in reported fraud and other types of economic crimes in Thailand over the last two years may indicate companies aren’t doing enough to protect themselves, a survey by PwC shows.

The survey, which is conducted every two years, canvassed the views of 286 respondents across all business sectors in Thailand about the types of crime that organisations face, who is responsible and the overall impact.

It found 33% of companies reported economic crime and fraud in Thailand this year, down from 48% in 2018. While on the surface this appears to be a positive development, lower reported crimes can indicate a bigger problem, warned Shin Honma, forensic services partner for PwC Thailand.

“We believe when reported incidences in Thailand are higher, as they were in 2018, this indicates companies are investing more in fraud detection programmes, specialised staff and technology needed to detect crime,” he said.

“When reported incidences fall, like they did this year, this could mean fraudsters are winning the war, evolving their methods and using new technologies to breach defences undetected.”

Asset misappropriation tops table: The survey, “Staying on top of a neverending war”, shows that asset misappropriation is still regarded as the most prevalent and disruptive of all crimes affecting Thai companies, followed by procurement fraud, bribery and corruption.

Insiders were responsible for 59% of fraud cases in Thai companies, compared with 37% for companies globally. Another 18% of cases involved collusion between internal and external actors. This illustrates that many fraud cases are highly complex and have multiple parties involved, making them more difficult to detect.

Survey respondents reported 30% of fraud cases were detected from tip-offs and whistleblowing. Other methods, such as general fraud risk controls (3%), and internal and external audits (7%), were less common.

Worryingly, less than 10% of corporate fraud programmes in Thailand follow best practices — indicating many cases of fraud are undetected and under-reported.

“Today’s companies need to take on board the risk of economic crime isn’t going away any time soon,” said Mr Honma. “If anything, companies are becoming even more exposed as the business environment changes to take advantage of new technologies.

“Especially in this increasingly complex world, companies need to focus more than ever on assessing their defences against fraud, and their readiness to respond with effective fraudfighting measures.”

PwC’s findings also show that a lack of expertise, resources and management support are impediments preventing Thai companies from implementing the necessary technologies to fight fraud and economic crimes. Many companies admitted they don’t even have basic fraud-prevention programmes in place.

For Thai companies, Mr Honma said, “the important question isn’t: Are you a victim of fraud? The question is: Are you aware of how fraud is affecting your organisation?

“The battle against fraud, corruption and other economic crimes is a neverending one, and companies can pay a steep price if they leave them. It’s still not too late for us to take appropriate steps to turn the tables against fraudsters and start to win the war.”

To read the full report, visit https://pwc. to/2Tnan3h

‘‘ Companies are becoming even more exposed as the business environment changes to take advantage of new technologies. SHIN HONMA Forensic services partner, PwC Thailand