Financial Crime World

Fraud and Economic Crime on the Rise: PwC Survey Reveals Alarming Trends

A recent survey by global consulting firm PwC has uncovered alarming trends in fraud and economic crime, with many organizations experiencing significant financial losses as a result. The survey, which polled over 7,000 executives across 123 countries, reveals that economic crime is a growing concern for businesses worldwide.

Most Common Forms of Economic Crime

According to the survey, money laundering (20%) and asset misappropriation (48%) are the most common forms of economic crime experienced by organizations in the past two years. Other prominent types of fraud include:

  • Business misconduct (31%)
  • Cybercrime (30%)
  • Bribery and corruption (28%)
  • Consumer fraud (26%)
  • Technology-related frauds

Internal Actors Perpetrate Most Disruptive Frauds

The survey reveals that internal actors, including senior management, are increasingly involved in perpetrating economic crimes. In fact:

  • 24% of reported internal frauds were committed by senior management
  • External actors were responsible for only 16% of reported frauds

This trend suggests that organizations need to focus on preventing internal fraud and improving their risk management practices.

Cybercrime on the Rise

Cybercrime is also becoming a significant concern, with:

  • 39% of respondents experiencing cyber-related fraud in the past two years
  • The growing importance of technology in business operations making it increasingly vulnerable

Third Parties Pose a Significant Threat

The survey highlights that third parties, such as agents, vendors, and customers, pose a significant threat to organizations. In fact:

  • 82% of reported frauds in Luxembourg were perpetrated by external actors
  • Many of these actors are “frenemies” with the organization

Financial Costs of Fraud Substantial

The financial costs of fraud can be substantial, with:

  • 30% of respondents reporting losses exceeding $1 million
  • 46% of respondents saying their organizations spent more on investigations and other interventions than was directly lost to fraud itself

Conclusion

The PwC survey serves as a stark reminder of the need for organizations to prioritize fraud prevention and risk management practices. As economic crime continues to rise, it is essential that businesses:

  • Invest in robust controls
  • Provide employee training
  • Conduct third-party due diligence
  • Mitigate the risks associated with fraud