By KEVIN WONG / Pic By ISMAIL CHE RUS
Economic crimes in Malaysia have been on the rise over the last two years, jumping to 41% this year compared to 28% in 2016, according to a survey.
The PwC’s Global Economic Crime and Fraud Survey 2018 said the three most common economic crimes in the last two years are business misconduct, asset misappropriation, and bribery and corruption.
PwC Consulting Associates (M) Sdn Bhd forensic services and risk consulting leader Alex Tan said some local organisations appeared to be unsure on addressing the risks of bribery and corruption.
“It is important to have a strong corporate culture which advocates zero tolerance towards fraud. However, without sufficient controls in place, organisations risk allowing economic crimes to fall through the cracks,” he said at a media briefing during the launch of Malaysia’s economic crime survey findings in Kuala Lumpur yesterday.
He said only 27% of the survey respondents have detected fraud through corporate controls such as suspicious activity monitoring and internal audit.
“Disparate process like weak internal controls often lead to poor internal transparency, impacting trust among employees.
“At the same time, being reactive can also damage your company’s reputation or brand. This is concerning, considering the level of preparedness among Malaysian companies,” he said, adding that 19% of the respondents have not performed any form of risk assessment in the last two years.
He added that the survey showed 48% respondents have spent an amount that is equal or more than the cost of the fraud to investigate and rectify issues.
On cyber crime, the survey found that 22% of local respondents have experienced cyber crime in the last two years.
“On harnessing technology to address fraud, 25% of the respondents said they do not have a cyber incident response plan.
“That said, the number of respondents who confirmed that they have a cyber incident response plan in place increased to 57% compared to 35% back in 2016,” Tan said.
In terms of fighting economic crime, Tan said technology is one of the main tools.
According to the survey, it found 26% do not know if technology is used to monitor fraud and economic crime, while 36% do not use technology at all.
“However, when companies do use technology, almost all of them agree that there are benefits, with 75% of them said technology enables monitoring in real time.
“Another 72% said they derive actionable insights from their monitoring activities,” he said, adding that Malaysians are lagging behind in the adoption of artificial intelligence (AI).
The survey showed 85% of Malaysian respondents do not have plans or are unaware of any such plans to implement AI or advanced analytics.
Meanwhile, the 2018 report found that 69% of the most impactful frauds in organisations are done by internal scammers.
PwC managing partner Sridharan Nair (picture) said out of the 69%, 32% of fraud are committed by senior management.