Title: Germany Cracks Down on Economic Crime: Tightening Regulations and Promoting Anti-Fraud Measures

Overview of Economic Crime in Germany

• Nearly half of all German companies have experienced economic crime (PwC’s Global Economic Crime Survey 2020)
• Types of economic crime: fraudulent accounting, embezzlement, market manipulation, and organized fraud

New Legislation and Regulations to Combat Economic Crime

• German legislature drafting new laws to strengthen corporate governance
• Expanded legal consequences for offending parties and their corporations

Importance of Anti-Fraud Measures for Companies

Quote: “In an era where economic crime is a pervasive threat for companies regardless of their size or industry, corporate management and supervisory boards must ensure that their organization has a suitable and, most importantly, effective Anti-Fraud Management System in place,” - Bernd Reimer, Partner at PwC Germany’s Forensic Services

Mandatory Internal Control and Risk Management Systems

• Listed companies need an appropriate internal control and risk management system
• Supervisory board members and audit committees’ expanded responsibilities

Increased Investigative Powers for the Federal Financial Supervisory Authority

• Search and seizure rights to uncover potential economic crimes

Independent Whistleblower Systems

• Companies must set up anonymous reporting channels

Penalties for Breaches of Accounting Regulations

• Hefty fines up to 10% of the company’s annual group revenue

Effectiveness of Anti-Fraud Management Systems

• PwC’s Anti-Fraud Management Assessment to help organizations evaluate their current anti-fraud measures

Components of the Anti-Fraud Management Assessment

1. Indicator-based fraud analysis
2. AI-based risk intelligence
3. Experience-based assessment of the status quo

Benefits of Conducting the Anti-Fraud Management Assessment

• Uncover weaknesses and proactively address deficiencies in fraud prevention systems
• Meet new stricter regulatory requirements

Quote: “With the insights gleaned from our analysis, companies can address deficiencies in their fraud prevention system and meet the new stricter regulatory requirements,” - Bernd Reimer

Conclusion

• Increased regulations focusing on fraud prevention, detection, and investigation
• Proactive approach to identifying and addressing weaknesses essential for companies’ bottom line and reputation protection.