A PwC survey indicating that the rate of economic crime in the Middle East is relatively low by global standards could mask a grimmer reality, the accounting group suggests.
According to PwC’s biannual 2014 Global Economic Crime Survey only 21% of the participating Middle East-based organisations report having fallen victim to financial fraud compared to the global average of 37%.
However, below the headline figure is a less encouraging reality: the region’s relatively low economic crime figure is more an indication of the lack of sufficiently-developed crime prevention and detection systems, meaning that the actual fraud numbers could be much higher than those reported.
“Middle Eastern organisations undertake fewer fraud risk assessments and put in place fewer fraud prevention and detection mechanisms,” said John Wilkinson, head of PwC’s Middle East forensic services. “That means that to look at that 21% figure in isolation is potentially misleading.”
Among the 2014 survey’s other findings:
- Sixteen per cent of financial crime in the Middle East is detected by chance compared to 7% globally, indicating a lack of effective fraud detection systems.
- Only 5% of economic crime in Middle East is detected through routine internal auditing compared to 12% globally, indicating that staff in this region requires more training to identify potential fraud.
- Thirty-eight per cent of Middle East respondents fear they will suffer some form of financial fraud over the next two years.
- The most common types of economic crime in the region include asset misappropriation, cybercrime, bribery, corruption and accounting fraud.
- Thirty-five per cent of Middle East organisations suffer from corruption; higher than the global average of 27%.
- Twenty-four per cent of the region’s organisations believe they lost out to a competitor who paid a bribe.
- Twelve per cent of respondents report they have suffered a financial loss exceeding US$5m in the past two years, while 6% said their crime-related losses were over US$100m – three times the global average.
- The typical fraudster is part of senior management staff, aged between 41 and 50.
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