Economic Crime Survey

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Economic crime remains an obstinate threat

Despite a robust legal framework and strict corporate governance, economic crime remains an obstinate threat in Singapore.

More than one fifth of organisations in Singapore experienced some form of economic crime in the past 24 months.

The rate of economic crime reported in 2016 (22%) remains largely unchanged for the country since 2014 (24%), and has been consistently below the global average (36%).

Top 5 Economic Crimes in Singapore

Asset misappropriation

Defined as the theft or embezzlement of cash, inventory and company’s assets by management or employees, this is by far the most frequently experienced type of economic crime, both in Singapore and globally.

This year, the percentage of asset misappropriation incidents in Singapore is at an all-time low of 61% since 2009. In fact, there has been a steady decrease in reported rates since 2011.

Is this good news?

While the downward trend appears encouraging, it does not mean that fraud incidents are on the decline.

There is also always a risk that fraudsters are using more sophisticated approaches which may not be detected and prevented by existing controls in the organisations.

Cybercrime

Singapore is becoming more of a target for cyber criminals. Cyber related incidents have risen sharply from 15% in 2014 to 43% in this year’s survey.

There is much catching up for companies in Singapore. Most companies surveyed are not adequately prepared to deal with cyber-attacks.

74% of participants have first responder teams to manage cyber breaches. While IT security staff are included in a significant majority of the teams, digital forensic investigators are however, only included in one of ten teams.

Procurement fraud

In Singapore, among companies that experienced a fraud incident, 35% were affected by procurement fraud this year, which is higher than both global (23%) and Asia Pacific (27%) results. More than 75% of respondents who experienced a procurement fraud reported that the fraud occurred at the beginning of the procurement process (i.e. during bidding and vendor selection).

20% of respondents believe that their organisation will be affected by a fraud incident related to procurement over the next 2 years.

Money laundering

The regulatory landscape in Singapore is changing rapidly to keep pace with the heightened requirements of the Anti-Money Laundering (AML) and Countering Financing of Terrorism Act (CFT).

The increase in regulatory activities could have led to more cases uncovered in the last two years – pushing up the statistics from 5% in 2014 to 26% in 2016.

When asked about the most significant challenge they face in relation to their AML/CFT monitoring systems, 45% of Singapore respondents compared to 24% globally stated that they are struggling with the complexity of implementing and upgrading them.

Bribery and corruption

At 17%, bribery and corruption remains one of the major economic crime suffered by Singapore-based companies, although this figure is lower than the regional average of 28%. These results highlight the substantial risk that companies and businesses with footprints in other South East Asia territories as well as those intending to expand into these markets may experience.

It is encouraging to see that a significant majority (91%) of Singapore-based companies have in place a formal business ethics and compliance programme and 95% of them have in place a Code of Conduct that covers this risk area.

That said, companies have to ensure that such policies and programmes are deployed effectively, and avoid the following commonly observed issues:

Dealing with Threats: React Efficiently, Prevent Effectively

More than half of the respondents (55%) felt that the main contributing factor to economic crime was weaknesses in business processes which were exploited by the perpetrators.

This figure has decreased from 2014 (77%), aligning with the observation that more Singapore-based companies are implementing control measures to detect and prevent fraud.

A majority of these cases were detected via suspicious transactions reporting and data analytics, fraud risk management and internal tip-offs or whistleblowing.

Dealing with threats

Companies are investigating fraud more effectively …

86% of Singapore-based respondents (compared to 78% in 2014) are open to engaging external parties such as legal advisors, external auditors, and specialist forensic investigators when they identify any incident of potential fraud.

... but more can be done to prevent fraud

66% of companies conduct a risk assessment at least once a year, compared to 51% in 2014. However, there is still room for improvement as 30% of respondents either do not perform or are unaware if their organisations perform any fraud risk assessment.

Contact us

Chan Kheng Tek

Forensics Leader, PwC Singapore

Tel: +65 9616 9820

Jimmy Sng

Cyber Security Partner, PwC Singapore

Tel: +65 9618 9773

Dmitry Kosarev

Director, PwC Singapore

Tel: +65 9671 1326

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