Financial crimes rising in Middle East

Region to spend more on compliance and fraud prevention

Incidents of financial fraud surged last year with 34 per cent of respondents reporting fraud/financial crime in a PwC survey tracking trends frauds in economic crime.

According to PwC’s the 2018 Middle East Economic Crime and Fraud Survey, asset misappropriation, business misconduct and fraud committed by consumers are the three most frequent types of fraud and/or economic crime reported by respondents.

Internal audit was the main contributor to detecting the most disruptive fraud experienced by respondents in the last 24 months (20 per cent) followed by internal tip-off’s (18 per cent), fraud risk management and suspicious activity monitoring (both at 14 per cent).

The study showed that regional organisations are realising the importance of antifraud technologies, and are looking to extend their investment and usage of it.

“Social and environmental pressures are increasing the focus on fraud and economic crime issues across the region. This rise is unsurprising as these issues are becoming more acute within organisations,” said Nick Robinson, Forensic Leader at PwC Middle East.

The most disruptive crime experienced by organisations has cost 46 per cent of respondents between $100,000 (Dh367,000) and $50 million. Nearly one third (29 per cent) of organisations think that cybercrime is likely to be the most disruptive fraud and/or economic crime in the next 24 months.

“Our 2018 Middle East Economic Crime and Fraud survey highlights the need for organisations to take proactive steps towards understanding fraud more comprehensively by uncovering fraud blind spots and taking necessary action to prevent it,” Robinson.

A vast majority (82 per cent) of respondents agree that the use of continuous real-time monitoring assists their organisation in combating fraud and/ or economic crime.

“Technology is proving to be a strong ally. Organisations in the Middle East are making growing use of technology in their anti-fraud efforts, with 82 per cent agreeing that using technology for real time monitoring assists in combating fraud,” said Robinson.

Fraud instigated by internal fraud actors is increasing rapidly, accounting for 48 per cent of economic crimes reported in the Middle East slightly below the global average of 52 per cent. Senior and middle management are the main perpetrators of internal frauds, accounting for 62 per cent of those reported.

Culture and people

The study shows that the proportion of organisations that have performed a fraud and economic crime risk assessment within the past 24 months has increased to 77 per cent in 2018 from 47 per cent in 2016. “Preventing and discovering fraud in organisations is not an easy task. It involves a focus on culture and people, in addition to investing in controls and technology,” said Tareq Haddad, Investigations Leader at PwC Middle East.