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Economic crime is a persistent and rising threat to businesses in Ireland, according to the 101 Irish respondents who took part in PwC’s 2016 Economic Crime survey.
A third of Irish respondents reported economic crime in the last two years, an increase from the 26% reported in 2014 and 2012.
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The frequency, impact and sophistication of economic crime are on the rise, and businesses are suffering accordingly. Our experts discuss the key findings from our fourth Economic Crime survey, including the advance of cybercrime.
Ireland has seen an increase in reported economic crime compared to the previous three surveys. While globally the level of economic crime has levelled out, in Ireland it has increased to the point that it has almost reached the global level.
Since the first global Economic Crime survey in 2001, three types of fraud have consistently registered as leaders among respondents – asset misappropriation, bribery & corruption and accounting fraud.
Cybercrime was added as a type of economic crime in 2012, and a high level of cybercrime has persisted as a continuing threat in Ireland, with nearly half of organisations in Ireland indicating they have been affected by cybercrime in the last two years.
Organisations often don’t grasp the true financial impact of an economic crime until after it has happened. The cost of economic crime is significant and increasing.
Of those affected by economic crime, almost half believed the total cost of economic crime to their organisation over the past two years was between €92,000 and €92 million.
Economic loss is not the only concern that companies face when they have been the victim of fraud – reputation, share price, employee morale, business relations and dealings with regulators can all suffer.
Economic crime continues to persist across all industries, despite the best efforts of organisations, regulators and anti-fraud practitioners.
There are areas of opportunity for forward-thinking organisations to try to increase their economic crime prevention and detection measures, such as data analytics, risk management and internal audit.
There have also been significant innovations in fraud detection in the FinTech space which should also be considered to improve an organisation’s controls and detection methods.
Technology today is so deeply woven into virtually every facet of most organisations that crimes committed through the digital means are a fundamental business problem.
For the third survey in a row, cybercrime ranked as the second most prevalent Irish economic crime. Of the Irish respondents who had experienced economic crime in the last 2 years, nearly half (44%) confirmed that their organisation had been the victim of cybercrime compared with only a quarter in 2012.
Financial crime compliance risks are showing no sign of abating. Not only is the number of compliance risks increasing, so is the complexity of those risks and the number of regulators.
A risk-based approach to compliance, one that begins with a holistic understanding of your financial crime risk, and an understanding of where your weaknesses are, is a must-have for today’s organisations.
From that position of clarity, you can define your roles, responsibilities and lines of defence – and create an effective programme that mitigates those risks, and positions you for reaching your business goals.
Money laundering facilitates economic crime and criminal activities including terrorism, drug trafficking, corruption, tax evasion and human trafficking. It can also seriously damage an organisation’s reputation and its bottom line. Global money-laundering transactions are estimated at $1-2 trillion annually.
Installing a robust, up-to-date Anti-Money Laundering compliance programme and embedding it effectively within your people, processes and technology can yield multiple business benefits.
Opportunities exist to reduce the risk of economic crime, and simultaneously benefit your business.
Organisations can proactively manage the risks associated with the spread of technology, what it means to conduct business responsibly across a widening business landscape and integrating ethical conduct into decision-making.