By Staff writer
New PwC report shows that number has risen by 5% in past two years but still lower than global average
More than a quarter (26 percent) of organisations in the Middle East have experienced economic crimes in the past 24 months, lower than the global average of 36 percent but a 5 percent increase since 2014, according to a new report.
The latest PwC Middle East Economic Crime Survey said that despite efforts to combat economic crime, there has been no clear indication that levels in the Middle East or globally have decreased since 2011.
According to the survey for 2016, the number in the region who simply didn’t know if they’d been a victim was much higher than the global average (20 percent against 11 percent), indicating uncertainty as to whether their organisations are experiencing economic crime.
“The challenge for businesses is to close down the opportunities to commit economic crime. A major part of this is staying ahead of new threats, while developing new ways to prevent, detect and respond effectively to those threats. It’s also vital to ensure that organisations have a culture based on strong values, supported by robust policies and ethics and compliance programmes,” said Nick Robinson, PwC regional forensic services leader.
The survey showed that even though there has been a marginal decrease, it is possible that this small decrease is actually masking a worrying trend – that economic crime is changing significantly, but that detection and controls are not keeping up with the pace of change, said PwC.
It added that the financial cost of each fraud is on the rise.
The survey revealed that 30 percent of organisations have been affected so far by cybercrime and 39 percent think they will be affected in the next two years. Cybercrime remains the second most reported economic crime.
PwC said most companies are still not adequately prepared for or even understand the risks faced, with only 33 percent of organisations having a cyber-incident response plan.
The survey said a fraudster in the Middle East is most likely in middle management or a junior role while the types of fraud more prevalent in the region include misclassification of payroll expenses, false wage claims and fraudulent reductions in payroll taxes.
The survey also showed that 92 percent of respondents in the Middle East say they don’t see bribery as a legitimate practise in their organisation, and 83 percent of them saying they would rather lose a sale than pay a bribe.
According to Transparency International’s Corruption Perception Index for 2016, a number of the major economies in the region have made progress in this area, with the ratings for Kuwait, Jordan, and Saudi Arabia all improving slightly.
According to the survey, one in four organisations have not carried out a single fraud risk assessment in the last 24 months, while 17 percent are discovered by mere accident.
Commenting on this, Tareq Haddad, PwC Middle East investigations leader said: “It takes continuous efforts to combat the persistent issue of economic crime. Over the year it has been proven that managements who have put in place strong anti-fraud programmes have preserved the value and reputation of their organisations and gained the trust of stakeholders through demonstrating its ability to deal with such complex issues.”For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.