Financial Crime World

Title: New Data Reveals Alarming Increase in Economic Crimes in Ukraine: How Prepared are Organizations?

Background

PwC’s Global Economic Crime and Fraud Survey (GECS) has been a leading publication highlighting economic crimes worldwide for the past 20 years. The survey aims to assess attitudes towards fraud and corruption and their impact on organizations globally.

Concerns for Ukrainian Businesses

With an escalating trend of economic crimes, many more Ukrainian companies are worried. Over 50% of Ukrainian businesses reported experiencing fraud within the past two years. This statistic raises critical questions for organizations:

  1. Is our risk management program flexible enough to address the complexities of a globalized business environment?
  2. Are we effectively implementing advanced technologies to combat fraud?
  3. How do we respond during crises?
  4. Are we adequately prepared for worst-case scenarios?

Key Findings from Ukraine

Fraud Experiences

Fraud incidents have reached an all-time high in Ukraine, with 51% of companies reporting fraud occurrences within the last 24 months. The leading types of fraud were:

  1. Asset Misappropriation (47%)
  2. Bribery and Corruption (47%)

Perpetrators

The percentage of fraud incidents orchestrated by external parties rose slightly to 41%. However, nearly half (46%) of Ukrainian respondents neglected or performed inadequate risk-based due diligence and ongoing monitoring of third parties.

Fraud Losses

The financial repercussions of fraud in Ukraine are not insignificant. A quarter (26%) of Ukrainian companies reported losses ranging from $50,000 to $1 million due to fraudulent activities. Moreover, 3% of respondents reported losses exceeding the $5 million mark.

Responses to Fraud

Alarmingly, only one-third of Ukrainian organizations conducted a formal investigation following a major fraud incident, and even fewer (29%) reported the incident to their board. Such findings underline a clear need for improvement in detecting, reporting, and tackling fraudulent activities.

To overcome economic crime, Ukrainian organizations need to adapt and take decisive action:

  1. Be Proactive

    • Recognize and prioritize fraud risks
    • Empower anti-fraud technology with robust governance, expertise, and monitoring
    • Respond quickly to fraud instances

  2. Act Effectively

    • Identify the root cause of the fraud issue
    • Engage external resources for investigations
    • Be transparent and disclose to the board and government authorities

  3. Recover Stronger

    • Reinforce internal controls, policies, and procedures
    • Implement new technologies
    • Offer regular training programs

These steps can help Ukrainian organizations not only survive in the face of economic crime but also cultivate a culture of transparency and accountability in their businesses.