Economic crimes still on the rise

PETALING JAYA: Malaysian organisations are not doing enough to protect themselves from the risks of economic crime, as evidenced by those like bribery and corruption, asset misappropriation and cybercrime, which continue to evolve in size and complexity, according to PwC Malaysia’s cut of the Global Economic Crime Survey 2016.
For bribery and corruption, the fact that almost all Malaysian respondents (98%) feel that their top level management are sending a clear message that they do not condone such crimes indicates a disconnect between the tone at the top and the reality on the ground.
Cybersecurity is another nagging issue with 42% of Malaysian organisations seeing an increased risk of cyber threats. Yet despite various high profile cybersecurity incidents being prominently discussed on social media over the past two years, 54% of organisations are unsure of whether or not they are at risk. Only 35% of respondents say that they have a fully operational incident response plan to cybercrime. Three in 10 have no plan at all, and of these, nearly half don’t think they need one.
PwC Consulting Associates (M) Sdn Bhd senior executive director and forensics lead Alex Tan said as the pace of technological advancements and globalisation increases, so does the complexity of these economic crime risks driven by cyber threats and regulatory pressures.
“However, too few companies are adapting their risk assessments and control frameworks fast enough. The increasing trend of ‘leaving it to chance’ when it comes to fraud detection will be harmful to a business’ resilience in the long run, if left unchecked,” said Tan.
In terms of anti-money laundering for instance, he said many organisations are not aware that as long as they facilitate financial transactions of some form, they would likely come under the scope of anti-money laundering (AML) legislation worldwide.
“Because of this lack of awareness, many organisations are not up to speed on AML requirements or the compliance programmes they need. What’s worrying is the apparent ambivalence of Malaysian companies towards such economic crime risks. Some of our respondents indicate that they are reducing their spending on anti-money laundering/countering the financing of terrorism (AML/CFT) controls by as much as 20% over the next two years.”
On the surface level, this can be attributed to increasing regulatory requirements which some believe are onerous and costly.
“At the speed with which the risk landscape is evolving, combating rampant economic crimes can no longer be the sole responsibility of a person or team; it must be embedded within the whole organisational culture. An approach that only dictates responsibility around job functions clearly won’t work, for instance viewing cybercrime as an IT issue or AML as a risk & compliance issue,” added Tan.