Financial Crime World

Fraudulent Opportunities Abound: Internal Perpetrators More Successful

A recent study by PwC’s Global Economic Crime and Fraud Survey has shed light on the alarming trend of internal fraudsters being more successful than external ones. The survey, which included respondents from the Philippines and Southeast Asia, reveals that 38% of internal perpetrators come from middle management, while 39% come from operational staff.

Internal Perpetrators’ Advantage

Internal perpetrators have a significant advantage in committing fraud due to:

  • Access to more detailed information
  • Direct access to circumvent controls
  • Pressure from senior management
  • Superior authority

On the other hand, external perpetrators usually come from vendors, customers, and hackers.

The Bangladesh Cyber Heist: A Case Study

The 2016 Bangladesh cyber heist is a prime example of internal fraud. RCBC was allegedly involved and suffered a record fine of PHP 1 billion (approximately US$19.17 million). The branch manager was sentenced to four to seven years in prison for money laundering.

Staying Ahead of Economic Crimes

Organizations must be vigilant against both internal and external threats. While external perpetrators may pose a significant threat, internal ones are more successful due to their access to sensitive information and authority within the organization.

Investing in Fraud Fighting Tools

The survey highlights the need for organizations to invest in technology-enabled fraud fighting tools. Only 14% of respondents introduced new technologies to combat fraud.

Upskilling Employees: A Key Solution

47% of respondents reported that their organization’s inadequate actions to upskill employees in essential technology has hindered efforts to fight economic crime. By providing adequate training for employees, organizations can reduce their risk of falling victim to fraudulent activities.

Prioritizing Fraud Prevention and Detection Strategies

As businesses move forward into a new decade, it is crucial that they prioritize fraud prevention and detection strategies to stay ahead of the evolving threat landscape. By implementing robust internal controls, enhancing policies and procedures, and providing adequate training for employees, organizations can reduce their risk of falling victim to fraudulent activities.

Source: PwC’s Global Economic Crime and Fraud Survey - The Philippine Report