Financial crime on the up in the Middle East, shows PwC survey

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A deep rise in financial crime in the Middle East for the last two years has been uncovered in the latest PwC survey with about half of all local companies reporting at least one occurrence over that duration. The survey reported that $42 billion was lost to financial crime in the last two years. Procurement fraud which is a traditional style of fraud has remained the new tactics now and it was globally averaged at a 19 per cent frequency rate. In the Middle East, however, 42 percent of the businesses across the eight countries of the survey reported at least one incidence of procurement fraud over the past two years, with the figure almost doubling from the prior survey.

20 per cent of local companies cited that procurement fraud has now relegated harmless back-scratching and has become one of the most disruptive crimes hitting their businesses. Rate of customer fraud has also increased from 36 per cent to 47 per cent while bribery and corruption remains a bane in the region.

As against the global average of 30 per cent, 45 per cent of regional organizations stated they uncovered bribery or corruption cases over the last two years even though only 18 per cent stated bribe was requested from them, a rate lower to the 29 per cent global average as incident-reporting at border-level remains lower. “These figures suggest a gap between the good intentions of Middle East organizations prevent and detect fraud and other economic crimes, and their ability to improve their performance in this area,” states the report, noting that the anti-fraud commitments of local businesses compare well to their counterparts abroad, with 63 percent of regional respondents against 44 percent globally having implemented/enhanced internal controls following an incident.

Achraf El Zaim, PwC Middle East’s Forensics Leader, in his conclusion about the whole situation said that it was essential to deploy the right talent coupled with technologies to proactively build fraud framework that will permit businesses in the Middle East to identify fraud risks, respond swiftly and ultimately come out of it stronger.