Published on the 31/08/2018 | Written by Jonathan Cotton
The latest from PWC shows employees, customers or suppliers biggest economic crime threat. Yikes…
Brace yourself for some grim reading: The new PWC report, the 2018 Global Economic Crime and Fraud Survey, puts ‘friends’ of the business right at the heart of Australia’s emerging economic crime landscape.
As if you weren’t paranoid enough.
“More than half of all economic crime is now committed by people who do business with the organisation on a regular basis,” says the report. “Employees, customers or suppliers.”
“Think of cybercrime as the biggest competitor you never knew you had.”
According to the report, 60 percent of fraud and economic crime in Australia is now committed by someone close to the organisation – in other words, a ‘frenemy’.
And it’s tech that’s empowering the crooks.
“One of the biggest drivers is the increasing availability of new technologies to facilitate fraud,” says the paper.
“For example, there is a rise in the use of ‘off the shelf’ editing apps to change documentation, make fraudulent IDs, credit card applications and insurance claims. People are also turning to the ‘dark web’ to source information about economic crimes and finding tools to help them.”
It’s not just opportunistic individuals doing the damage, however. A key driver is the increasing influence and sophistication of organised crime, who are continually finding sneaky new ways to get closer to Australian businesses.
“Do you really know the directors or key managers of your supplier companies? What about the past histories of business agents or consultants? Do you know if they have any links – however tangential – to crime syndicates?”
But before panic sets in, there are some red flags that can help you distinguish friend from foe says PwC:
- If your employee or vendor is reluctant to complete the onboarding process and provide documentation in a timely, transparent and complete manner
- If it’s difficult to establish who is the ultimate beneficial owner of a third party you are working with
- If corporate ownership structures are overly complex
- If verification relies on overseas translated documentation
The solution is simple, then. Trust no one.
“The key is to be more active and alert at the beginning of the process – before you even become friends – rather than when something goes wrong,” says PwC.
“This means better background checks, better ‘know your customer’ (KYC) processes where required, and better due diligence before working with any new third party.”
And as for the rest of the threats Aussie businesses face? That other old friend, cyberattacks. “Cybercrime can almost be considered an ‘industry’ in its own right, given the scale of its operation and the sophistication of its methods,” says the report.
“Think of it as the biggest competitor you never knew you had.”
“In the last two years, almost half (43 percent) of Australian organisations we surveyed said they had suffered a cyber attack. However, the number is probably much higher; we see at least one new attack every fortnight. And it’s likely only to get worse. Both in Australia and globally, firms expect cyber be the most disruptive economic crime over the next two years, and CEOs say it’s the number one threat to their organisation’s growth prospects.”
And despite the clear and present danger, laments PwC, in general, Australian companies are unlikely to be prepared for the worst, with almost half of organisations (48 percent) not having carried out a cyber-vulnerability assessment, and more than a third (36 percent) without a cybersecurity plan in operation. “Without these ‘basics’ in place, organisations will find themselves not only highly vulnerable to a successful cyber attack, but poorly prepared to respond when the inevitable happens.”