A resilient business does not rely on chance — where there is a threat, there must be a strategy. Fraud risk detection, prevention and mitigation services for companies in Ukraine.
Fraud risk management is a comprehensive systematic approach to identifying, assessing, monitoring and mitigating threats of fraudulent activity. It includes proactive controls, such as transaction monitoring, customer verification, implementation of internal policies, etc., to minimise financial losses, reputational damage and other adverse effects of fraudulent activity.
PwC offers end‑to‑end fraud prevention solutions covering the full fraud risk management cycle. With many years of experience and a deep understanding of the local environment, we help companies build a robust protection framework against both internal and external threats of fraud.
The list below outlines the key types of fraud that are most relevant to the Ukrainian business environment:
Fraud rarely looks like an obvious theft. Most often, it manifests in gradual losses — through procurement kickbacks, inflated invoices and asset abuse that can remain undetected for years. Fraudulent activities pose risks to companies on multiple levels simultaneously: direct financial losses, reputational damage and legal consequences — all of which can cause serious damage even to resilient businesses and, in some cases, threaten their existence.
Companies that apply a proactive approach implement fraud risk management in their operating strategy. The objective is to identify vulnerabilities before they are exploited, rather than to respond to losses to reduce both the likelihood of fraud and the severity of its effects.
Sources: ACFE Occupational Fraud Report
The top 3 costliest types of fraud according to the ACFE Report:
Source: ACFE Occupational Fraud Report
Most executives see only the direct theft of money. However, the true cost of fraud runs much deeper:
Kickbacks from suppliers (10–30% of the contract price)
Fictitious and inflated invoices
Procurement of low‑quality goods at the price of high‑quality ones
Loss of contracts due to a corrupt reputation
Unfavourable terms due to wrongful decisions made
Litigation expenses reaching millions in value for complex cases
Lawyer services
Expert evidence costs
Tax sanctions (from 25% to 100% of the amount of tax abuse)
Regulatory fines (the NBU, the NSSMC, etc.)
Compliance irregularities (GDPR, AML and FCPA for multinational companies)
Recovery of losses to affected parties
Shareholder compensation
Distraction of management during investigations (hundreds of hours spent by top management)
Lower performance due to team demoralisation
Time needed to recover processes after fraud detection
Termination and replacement of compromised employees
Lost knowledge and expertise
Recruiting and onboarding costs for new joiners
Downtime during investigations
Process rebuilding required
Implementation of new controls
Lower morale of a team after fraud detection
Management distrust
Talent drain (up to 25% of top performers may leave)
Suspicion and paranoia instead of collaboration
Concealment of errors by employees
Fostering a culture of integrity
An inability to participate in tenders due to reputational risks
Counterparts’ refusal to cooperate
Blocking of entry to new markets
Impairment of a company value
Failed investor deals
IPO failures
Customer churn after high-profile fraud scandals
Sales drop after a public incident
3-5 years taken to recover reputation
Decline in stock value
Complicated investment raising process
Higher loan pricing
Negative publications staying in Internet forever
Viral impact in social media
Increasing reputation attacks by competitors
We provide comprehensive services at each risk management stage – from preventive measures to fraud recovery – ensuring that a comprehensive approach is applied to business protection. PwC Forensic team possesses extensive fraud risk management expertise enabling to develop tailored solutions aligned with specific requirements of each organisation to enhance its protection and ethical culture.
We conduct a comprehensive review of your organisation to identify its vulnerabilities and potential threats. A fraud risk assessment includes:
Identification of potential fraud scenarios;
Business process analysis to identify weak anti-fraud controls;
Evaluation of corporate culture and tone from the top;
Analysis of external risks (counterparties, suppliers, vendors and customers);
Development of a prioritised fraud risk log;
Support in the implementation of process and system changes to enhance protection from future threats.
Outcome/deliverable: A detailed report with recommendations, a risk heat map and a remediation plan.
We develop a fraud risk management system specifically tailored to your business needs:
Anti-fraud policies and procedures;
Design of internal controls;
KRIs (Key Risk Indicators) for fraud monitoring;
Support in selecting and implementing confidential channels of a whistleblowing hotline for employees to report suspicious actions as well as support in protecting whistleblowers;
Counterparty due diligence procedures;
Development of recovery and improvement strategies, and provision of recommendations on remedial actions to resume normal operations and to eliminate the effects of fraud;
Support in the implementation of process and system changes to enhance protection from future threats;
Employee training programmes.
Compliance with standards: ISO 37001 (Ant-bribery Management Systems), COSO Framework and ACFE international best practices.
Professional investigations of fraud incidents using advanced forensic techniques:
Independent diagnostic conducted to detect and assess potential fraudulent schemes;
Internal investigations of fraud incidents to establish root causes and the specific circumstances surrounding a discovered fraud;
Data analysis to identify irregularities and fraud patterns;
Interviews with suspects;
Preparation of a body of evidence;
Loss quantification and recovery pathway;
Provision of management with relevant information on investigation findings and recommendations on further actions, including advice on potential prosecution of fraudsters.
Strict confidentiality guaranteed. All investigations are conducted in full compliance with the Ukrainian legislation.
We help companies create an effective and efficient transaction control framework and support them throughout its implementation:
Assessment of current monitoring systems;
Data analysis and identification of irregularities;
Preparation of further monitoring recommendations;
Support in the technology vendor selection;
Control testing and gap analysis.
Integrity checks of counterparties, business partners and potential investees:
Corporate intelligence and background checks;
Financial analysis and identification of red flags of fraud;
Sanction list and PEP screening;
Reputation checks of UBOs and management;
Corruption and money laundering risk assessment.
We raise employee awareness of fraud risks:
Fraud prevention training of top management, finance function and controllers;
Organising and delivering training to raise employee awareness of potential fraudulent schemes and relevant preventive methods;
Dedicated workshops (fraud detection, red flags);
Development of training materials and case studies.
The implementation of a fraud risk management system is a comprehensive transformation that requires a structured plan, consistent communications and active engagement across the entire organisation. In order to build and implement an effective system, we apply a methodology based on international standards and best practices, which includes the following key stages:
Gathering of information about the company processes
Identification of critical risk areas
Interviews with key employees
Fraud risk assessment
Testing of existing controls
Data analysis and identification of irregularities
Technology selection and implementation support
Development of policies and procedures
Development of an implementation plan
Process and control setting
Employee training
Launch of a monitoring system
Regular performance checks
Risk assessment updates
System improvements
✓ High cash flow level: Large volumes of financial transactions create more opportunities for irregularities.
✓ Low profitability: Retail and distribution with margins of 3–5% — even 1% of fraud can wipe out a third of the profit.
✓ Significant inventory levels: Inventory is an easy target for theft and supplier‑related schemes.
✓ Complex calculations: Bonuses, commission fees and revenue share models — all create space for manipulation.
✓ Decentralised structure: Numerous branches/stores with autonomous management make control difficult.
✓ Geographical dispersion: International operations and remote regions — poor oversight.
✓ High employee turnover: Retail and HoReCa sectors constantly hire new staff, making it difficult to build a strong corporate culture.
✓ Cash transactions: Restaurants, petrol filling stations and retail points — cash settlements increase a risk significantly.
✓ Regulatory oversight: Financial services, pharmaceuticals and the public sector — fraud results not only in losses but also in regulatory sanctions.
✓ Reputational sensitivity: Brands and public companies — a fraud scandal can cause a collapse in market capitalisation.
✓ Competitive pressure: In a highly competitive environment, pressure to meet targets at any cost increases the likelihood of fraud.
✓ Rapid growth: Fast business expansion often outpaces control agility.
✓ Mergers and acquisitions(M&A): Each transaction carries the risk of integrating third-party schemes and vulnerabilities that standard due diligence may fail to identify.
✓ Preparation for IPO/sale: The identification of fraud incidents during investor checks may disrupt the transaction or lead to a reduction in valuation.
✓ Leadership changes: Inherited schemes are the most susceptible to detection, yet they also pose the greatest risk to the new management team.
✓ Financial difficulties: Companies in crisis face increased pressure on top management and employees, which elevates the risk of fraud — with growing incentives to “adjust” or manipulate figures at all levels.
Loan and payment card fraud
Money laundering
Internal fraud committed by employees
Complex financial products (loans or derivatives) create opportunities for irregularities
Regulatory requirements — fraud leads to the risk of losing a license
Employees’ internal access to customer accounts
Loan fraud (fictitious borrowers or kickbacks from developers)
Insurance fraud (fictitious insurance claims or collusion with customers)
Insider trading and market manipulation
Money laundering facilitation
Stealing of goods and shrinkage
Return fraud
Promo abuse
Large inventory stock with thousands of SKUs
Many points of sale that are difficult to control
Seasonal staff
Low profitability — even 2–3% fraud leads to operating at loss
Vendor fraud (short deliveries and kickbacks for inclusion in the product mix)
Theft of goods by employees
Discount abuse (unauthorised discounts for acquaintances)
Return of stolen goods for cash
Manipulations with cash registers (cancellation of transactions after payment)
Procurement fraud
Theft of raw materials and finished goods
Vendor kickback schemes
Procurement of raw materials worth millions — significant amounts for kickback schemes
Complex supply chains with many intermediaries
Technical specifications — the procurement department may tailor requirements to favour a specific supplier
Kickbacks from vendors (10–30% of the contract price)
Inflated prices for raw materials and components
Improper quality substitution (one grade is ordered, a cheaper one is delivered)
Fake intermediaries used to siphon off funds
Falsification of documents
Corruption in procurement
Insurance claim fraud
High‑margin products (medications with a markup)
Regulatory requirements — fraud leads to loss of licences
Insurance benefits — overbilling potential
Overbilling to insurance companies or the government for medical services
Kickbacks from pharmaceutical companies for prescribing specific medications
Counterfeit medicines entering the supply chain
Manipulation of clinical trial data
Tender corruption
Misuse of budget funds
Conflict of interests
Lack of profit‑driven motivation results in weaker financial discipline
Bureaucratic procurement processes create space for corruption
Political pressure to appoint loyal individuals
Public oversight creates reputational risks
Tender bribery
Procurement fraud (inflated prices, fictitious suppliers)
Payroll fraud ("ghost" or fictitious employees)
Embezzlement
Fictitious repair expenses
Fuel theft
Cargo theft
Goods in transit — it is difficult to track movements
Fuel expenses — large amounts that are easy to manipulate
Driver expenses — opportunities for fictitious expense schemes
Inflated repair expenses (collusion with service stations)
Cargo theft involving drivers
Fuel theft or fictitious fuel purchases
Route manipulation for personal purposes
Kickbacks from contractors
Theft of construction materials
Overstated budgeted expenses
Bribery to obtain permits and approvals
Kickbacks from contractors
Theft of construction materials
Overstated budgeted expenses
Dependence on government permits creates corruption risks
Kickbacks to contractors in exchange for winning contracts
Systematic theft of materials from construction sites
Overstated expenses in project estimates
Bribes to officials to expedite approval procedures
Cyber fraud
System security breaches and information theft
Insider threats
Intellectual property — the core asset that is easy to copy and steal
Remote work and system access complicate control
Technical expertise enables employees to override security controls
Rapid technological advancement — security often lags behind innovation
Access to sensitive customer data creates opportunities for misuse
Theft of source code to transfer it to competitors or to use it in personal projects
Selling customer databases to third parties
Fake providers of licence or service (inflated “consulting” or “licensing” fees)
Backdoor access
Expense fraud (disguising personal purchases as business equipment expenses)
According to the ACFE, 85% of fraudsters are first‑time offenders with no prior criminal record. Even honest employees may commit fraud when three factors are present: opportunity, financial pressure and rationalisation (internal justification of their actions).
Internal audit focuses on compliance with procedures rather than on fraud detection. This requires different competencies, methodologies and work approaches.
The ACFE data shows that fraud occurs in organisations of all sizes, with cases distributed relatively evenly across company scales. The highest median losses are recorded in companies with 10,000+ employees. However, small businesses (less than 100 employees) are not an exception. For small businesses, losses are significantly more painful due to limited budgets, lower liquidity buffers and generally weaker internal controls.
Fraud costs companies around 5% of annual revenue on average (according to the ACFE data). For a company with USD 10 million in revenue, that amounts to USD 500,000 annually. Fraud risk management costs only a portion of this amount and pays off.
A fraud risk management system helps identify weaknesses in general risk management strategies of an organisation, which allows taking remedial actions to eliminate them promptly.
The effective system enables to detect potentially suspicious transactions or fraud schemes at early stages, helping reduce direct financial losses.
Investors, acquirers and underwriters assess the maturity of the internal control environment as part of the due diligence process. The existence of a documented fraud risk management system enhances confidence in the company and helps protect its valuation during funding rounds, M&A transactions or IPO preparation.
Implementing dedicated fraud detection technologies can automate and optimise internal processes, reducing audit timing and staff workload.
In Ukraine and across international jurisdictions, executives and supervisory board members may incur personal liability for inadequate internal controls, including exposure to financial sanctions and criminal prosecution. A documented and implemented fraud risk management system serves as evidence of due diligence on the part of management and significantly reduces these risks.
Numerous regulators require organisations to have an internal control and risk management system in place, and a fraud risk management system can be an important part of this requirement.
A consistent approach to fraud risk management demonstrates customers and investors that an organisation is committed to security and protection of its assets.
Collecting and analysing data on fraud attempts can provide the valuable information about risks, enabling to develop more accurate forecasts and business development strategies.
Regular personnel training and learning on fraud indicators and methods raise the company-wide awareness level, which contributes to a faster detection of potential threats.
