Almost half of financial services organisations have been victims of economic crime, and the number of incidents and their financial value is increasing, according to research by PwC
PwC's 2014 Global Economic Crime Survey, which includes responses from the financial services sector across 79 countries, found that 45% of respondents have experienced economic crime, compared with 34% across all other industries. The most common form was theft, reported by 67%, followed by cybercrime (39%), money laundering (24%), accounting fraud (21%) and bribery and corruption (20%).
Andrew Clark, partner in PwC’s forensics practice, said: ‘Financial services organisations are finding that economic crime persists despite ongoing efforts to combat it and no organisation of any size anywhere in the world is immune to the impact of fraud and other crimes. The direct financial impact of economic crime harms organisations but such crimes also damage internal processes, erode the integrity of employees and tarnish reputation.’
PwC’s figures show that while cybercrime rates in the financial services sector (39%) are double those of other industries (17%) , only 41% believe it is likely that they will experience cybercrime in the next two years and a further 19% are unsure whether they are likely or unlikely to experience cybercrime.
Clark said: ‘In our experience, financial services organisations do not always identify and log the cyber-element of economic crime experienced. This leaves them exposed to cyber threats in spite of any existing cyber defence: if cybercrime is not being accurately tracked, the true risk of cybercrime cannot be fully grasped and understood.’
The research suggests economic crime is on the rise in Asia Pacific, where at least half of financial services respondents reported an increase; in contrast, nearly 40% of respondents from South and Central America reported a decrease.
External fraudsters are still the main perpetrators of economic crime for the majority of financial services organisations (57%). Most internal frauds are committed by junior staff (39%) and middle managers (39%) with a fifth of internal economic crime committed by those in senior management.
However, the survey also found that tighter regulation in the financial services sector made internal fraud more difficult. Of the financial services respondents who knew how the economic crime in their organisation had been detected, 61% attributed the detection to having corporate controls in place compared to 56% in other industries.
