Methodology and acknowledgments

We carried out our eight Global Economic Crime Survey was carried out between July 2015 and February 2016.

The survey comprised six sections dealing with the following areas

* Organisational profile

* Economic crime trends

* Technology

* Profile of the fraudster and economic crime detection methods

* Business ethics and compliance programmes

* Anti-money laundering and counter financing of terrorism

About the survey

The 2016 Global Economic Crime Survey was completed by 6,337 respondents (compared to 5,128 respondents in 2014) from 115 countries (compared to 99 countries in 2014). Of the total number of respondents, 45% were senior executives of their respective organisations, 37% represented listed companies and 54% represented organisations with more than 1,000 employees.

Research techniques

We used the following research techniques:

1. Survey of executives in the organisation. The findings in this survey come from executives’ reports of their experiences of economic crimes in their organisations. We obtained information from them on the different types of economic crime, their impact on the organisation (both the financial loss and any collateral damage), the perpetrator of these crimes, what action the organisation took and how they responded to the crime.

2. Questions relating to cybercrime, business ethics and compliance (including corruption & bribery) and money laundering. This survey takes a detailed look at these threats which are often systemic in nature and thus are more prone to have a long term, damaging impact on the organisation.

3. Analysis of trends over time. Since we started doing these surveys in 2001, we have asked a number of core questions, and extra ones that are relevant from time to time, dealing with issues likely to have an impact on organisations around the world. With this historical data at hand, we can see current themes, chart developments, and find trends.

Other PwC resources

19th Annual Global CEO Survey

Global State of Information Security Survey

 

Participating territory counts 

Africa

Participating territory counts 2016 2014
Africa
Algeria 0 2
Angola 10 22
Benin 0 0
Botswana 0 5
Burkina Faso 0 0
Burundi 0 0
Cameroon 1 6
Cape Verde 0 0
Central African Republic 0 0
Chad 0 0
Comoros 0 0
Congo, Republic of 3 1
Democratic Republic of the Congo 2 0
Djibouti 0 0
Egypt 3 7
Equatorial Guinea 0 0
Eritrea 0 0
Ethiopia 2 0
Gabon 0 0
Gambia 0 0
Ghana 1 3
Guinea 0 2
Guinea-Bissau 0 0
Ivory Coast 0 3
Kenya 99 124
Lesotho 1 1
Liberia 1 0
Libya 0 0
Madagascar 0 0
Malawi 0 1
Mali 1 0
Mauritania 0 0
Mauritius 0 0
Mayotte 0 0
Morocco 1 17
Mozambique 1 4
Namibia 15 26
Niger 0 0
Nigeria 108 82
Reunion Island 0 0
Rwanda 0 0
Sao Tome and Principe 0 0
Senegal 0 0
Seychelles 0 0
Sierra Leone 1 1
Somalia 0 0
South Africa 232 134
South Sudan 2 0
Sudan 1 1
Swaziland 1 4
Tanzania; officially the United Republic of Tanzania 3 12
Togo 0 0
Tunisia 1 17
Uganda 0 12
Western Sahara 0 0
Zambia 135 83
Zimbabwe 19 42

Asia Pacific

Participating territory counts 2016 2014
Asia Pacific
Afghanistan 0 0
American Samoa 0 0
Australia 83 79
Bangladesh 0 0
Bhutan 0 0
Brunei Darussalam 0 0
Cambodia 0 0
China 85 85
Christmas Island 0 0
Cocos (Keeling) Islands 0 0
Cook Islands 0 0
East Timor (Timor-Leste) 0 0
Fiji 0 0
French Polynesia 0 0
Guam 0 0
Hong Kong 92 116
India 201 115
Indonesia 30 4
Iran (Islamic Republic of) 0 0
Japan 73 75
Kazakhstan 69 1
Kiribati 0 0
Korea, Democratic People's Rep. (North Korea) 0 0
Korea, Republic of (South Korea) 12 0
Kyrgyzstan 0 0
Lao, People's Democratic Republic 1 0
Macau 2 0
Malaysia 83 110
Maldives 0 0
Marshall Islands 0 0
Micronesia, Federal States of 0 0
Mongolia 0 0
Myanmar, Burma 1 0
Nauru 0 0
Nepal 0 0
New Caledonia 1 0
New Zealand 85 82
Niue 0 0
Northern Mariana Islands 0 0
Pakistan 0 0
Palau 0 0
Papua New Guinea 1 81
Philippines 88 0
Pitcairn Island 0 0
Samoa 0 0
Singapore 103 82
Solomon Islands 0 0
Sri Lanka 0 0
Taiwan (Republic of China) 2 0
Tajikistan 0 0
Thailand 261 76
Tibet 0 0
Tokelau 0 0
Tonga 0 0
Turkmenistan 0 0
Tuvalu 0 0
Uzbekistan 0 0
Vanuatu 0 0
Vietnam 14 1
Wallis and Futuna Islands 0 0

Europe

Participating territory counts 2016 2014
Europe
Albania 26 0
Andorra 0 0
Armenia 0 0
Austria 4 6
Azerbaijan 0 0
Belarus 0 0
Belgium 58 68
Bosnia and Herzegovina 10 0
Bulgaria 77 79
Croatia 47 0
Cyprus 90 88
Czech Republic 79 94
Denmark 34 118
Estonia 0 0
Faroe Islands 0 0
Finland 80 34
France 125 131
Georgia 0 0
Germany 17 10
Gibraltar 0 0
Greece 2 11
Hungary 95 91
Iceland 0 0
Ireland 101 78
Italy 142 101
Kosovo 12 0
Latvia 0 0
Liechtenstein 0 0
Lithuania 3 1
Luxembourg 50 12
Macedonia, Rep. of 7 0
Malta 0 0
Moldova, Republic of 12 0
Monaco 0 0
Montenegro 1 0
Netherlands 117 75
Norway 58 92
Poland 94 94
Portugal 67 75
Romania 105 77
Russian Federation 120 111
San Marino 1 0
Serbia 19 52
Slovakia (Slovak Republic) 89 76
Slovenia 51 33
Spain 83 79
Sweden 84 91
Switzerland 58 83
Turkey 91 78
Ukraine 129 90
United Kingdom 237 372
Vatican City State (Holy See) 0 0

Middle East

Participating territory counts 2016 2014
Middle East
Bahrain 7 2
Iraq 21 0
Israel 1 31
Jordan 12 9
Kuwait 2 0
Lebanon 2 8
Oman 7 1
Palestinian territories 1 0
Qatar 75 12
Saudi Arabia 74 74
Syria, Syrian Arab Republic 1 1
United Arab Emirates 89 117
Yemen 0 0

North America

Participating territory counts 2016 2014
North America
Anguilla 0 0
Antigua and Barbuda 0 0
Aruba 1 0
Bahamas 0 2
Barbados 0 1
Bermuda 1 0
Canada 143 100
Cayman Islands 0 0
Cuba 1 2
Dominica 0 0
Dominican Republic 1 1
Greenland 0 0
Grenada 0 0
Guadeloupe 0 0
Haiti 0 0
Jamaica 1 0
Martinique 0 0
Montserrat 0 0
Netherlands Antilles 0 0
Puerto Rico 0 0
Saint Kitts and Nevis 0 0
Saint Lucia 0 0
Saint Vincent and the Grenadines 0 0
Trinidad and Tobago 0 0
Turks and Caicos Islands 0 0
United States 328 115
Virgin Islands (British) 0 0
Virgin Islands (U.S.) 0 0

Latin America

Participating territory counts 2016 2014
Latin America
Argentina 124 82
Belize 0 0
Bolivia 0 0
Brazil 211 132
Chile 64 75
Colombia 118 1
Costa Rica 1 0
Ecuador 1 22
El Salvador 0 0
Falkland Islands 0 0
French Guiana 0 0
French Southern Territories 0 0
Guatemala 1 0
Guyana 0 0
Honduras 1 0
Mexico 243 211
Nicaragua 1 0
Panama 0 0
Paraguay 1 0
Peru 18 82
Suriname 0 0
Uruguay 107 0
Venezuela 248 100

Total

Participating territory counts 2016 2014
No primary country specified 24 28
Total 6,337 5,128

Participating industry groups

Participating Industry Groups 2016 2014
Aerospace and Defence 1% 1%
Automotive 4% 4%
Chemicals 2% 2%
Communications 3% 3%
Energy, Utilities and Mining 9% 7%
Engineering and Construction 5% 6%
Entertainment and Media 2% 2%
Financial Services 20% 19%
Government/State Owned Enterprises 4% 5%
Hospitality and Leisure 3% 2%
Manufacturing 11% 9%
Insurance 4% 7%
Pharmaceuticals and Life Sciences 4% 5%
Professional Services 6% 6%
Retail and Consumer 7% 7%
Technology 5% 5%
Transportation and Logistics 4% 5%
Agriculture 1%  
Education 1%  
Healthcare 1%  
Other Industry/Business (please specify) 3%  

Principal function of participants

Principal functions of participants 2016 2014
Audit 13% 14%
Advisory/Consultancy 4% 4%
Compliance 7% 6%
Customer Service 1% 1%
Executive Management 18% 18%
Finance 26% 28%
Human Resources 2% 1%
Information Technology 3% 2%
Legal 4% 4%
Marketing and Sales 4% 3%
Operations and Production 4% 2%
Procurement 1% 1%
Research and Development 1% 1%
Risk Management 6% 6%
Security 3% 3%
Tax 2% 1%
Other 2% 6%

Job title of participants

Job-titles of participants 2016 2014
C-Suite 45% 50%
Head of Department / Business Unit 30% 27%
Manager 19% 22%
Other 6% 2%

Organisation types participating

Organisation types participating 2016 2014
Publicly Traded Company 37% 35%
Privately Owned 49% 50%
Government/State Owned Enterprise 9% 9%
Other 5% 6%

Size of participating organisations

Size of participating organisations 2016 2014
Up to 1,000 employees 45% 44%
1,001 to 5,000 employees 20% 20%
More than 5,000 employees 34% 34%


Terminology

Accounting fraud

Financial statements and/or other documents are altered or presented in such a way that they do not reflect the true value or financial activities of the organisation. This can involve accounting manipulations, fraudulent borrowings/raising of finance, fraudulent application for credit and unauthorised transactions/rogue trading.

Asset misappropriation, including embezzlement/deception by employees

The theft of assets (including monetary assets/cash or supplies and equipment) by directors, others in fiduciary positions or an employee for their own benefit.

AML

Anti-Money Laundering

Bribery

The unlawful use of an official position to gain an advantage in contravention of duty. This can involve the promise of an economic benefit or other favour, the use of intimidation or blackmail. It can also refer to the acceptance of such inducements. Specific examples include kickbacks, extortion, gifts (with strings attached), facilitation payments, etc.

Corruption

Dishonest or fraudulent conduct by those in power, typically involving bribery.

CFT

Counter Terrorist Financing

Competition Law/Anti-Trust Law

Law that promotes or maintains market competition by regulating anti-competitive and unfair business practices conduct by organisations. Examples may include price fixing, excessive, predatory or discriminatory pricing, unfair trading terms, and tying (i.e., stipulating that a buyer wishing to purchase one product must also purchase all or some of his requirements for a second product).

Cybercrime

Also known as computer crime is an economic offence committed using the computer and internet. Typical instances are the distribution of viruses, illegal downloads of media, phishing & pharming and theft of personal information e.g. bank account details. This excludes routine fraud whereby a computer has been used as a by product in order to create the fraud and only includes such economic crimes where computer, internet or use of electronic media and devices is the main element and not an incidental one.

Economic crime

The intentional use of deceit to deprive another of money, property or a legal right.

Espionage

Espionage is the act or practice of spying or of using spies to obtain secret information.

Financial loss

When estimating financial losses due to fraud, the participants should include both direct and indirect loss. The direct losses are the actual amount of fraud and the indirect losses would typically include the costs involved with investigation and remediation of the problem, penalties levied by the regulatory authorities, and litigation costs. This should exclude any amount estimated due to “loss of business opportunity”.

Financial terms

When estimating financial losses due to fraud, the participants should include both direct and indirect loss. The direct losses are the actual amount of fraud and the indirect losses would typically include the costs involved with investigation and remediation of the problem, penalties levied by the regulatory authorities, and litigation costs. This should exclude any amount estimated due to “loss of business opportunity”.

Fraud risk assessment

These are used to ascertain whether an organisation has undertaken an exercise to specifically consider:

1. The fraud risks to which operations are exposed;

2. An assessment of the most threatening risks (i.e., Evaluate risks for significance and likelihood of occurrence);

3. Identification and evaluation of the controls (if any) that are in place to mitigate the key risks;

4. Assessment of the general anti fraud programs and controls in an organisation; and;

5. Actions to remedy any gaps in the controls.

 

 

Human Resources fraud (recruitment and/or payroll fraud)

Fraud committed by members of the Human Resources department, including payroll fraud, ghost employees, pay-to-work, recruitment (i.e., hiring friends and/or relatives, hiring unqualified individuals, falsification of documents, etc.).

Incentive/Pressure to perform

The individual has some financial problem that he/she is unable to solve through legitimate means so he/she begins to consider committing an illegal act as a way to solve the problem. The financial problem can be professional (e.g., job is in jeopardy) or personal (e.g., personal debt).

Insider trading

Insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, non public information about the security. Insider trading violations may also include ‘tipping’ such information, securities trading by the person ‘tipped’, and securities trading by those who misappropriate such information.

Intellectual Property (IP) infringement

IP infringement including trademarks, patents, counterfeit products and services. This includes the illegal copying and/or distribution of fake goods in breach of patent or copyright, and the creation of false currency notes and coins with the intention of passing off as genuine.

KYC

Know Your Client/Customer

Markets with a high level of corruption risk

While corruption risk levels can be subjective, for the purposes of this survey we suggest a territory with a Transparency International Corruption Perception Index ("CPI") score of 50 or less be considered a market with a high level of corruption risk. The link below will direct you to the Transparency International list of territories with CPI scores of 50 or less.

Money laundering

Actions intended to legitimise the proceeds of crime by disguising their true origin.

Mortgage fraud

Mortgage fraud schemes employ some type of material misstatement, misrepresentation, or omission relating to a real estate transaction which is relied on by one or more parties to the transaction.

Opportunity or ability

The individual finds some way that he/she can use (abuse) his/her position of trust to solve the financial problem with a low perceived risk of getting caught.

Procurement fraud

Illegal conduct by which the offender gains an advantage, avoids an obligation or causes damage to his organisation. The offender might be an employee, owner, statutory board member, an official, a public figure or a vendor who was involved in the purchase of services, goods or assets for the affected organisation.

Rationalisation

The individual finds a way to justify the crime to himself/herself in a way that makes it an acceptable or justifiable act.

Tax fraud

An illegal practice where an organisation or corporation intentionally avoids paying its true tax liability.