The Global Fraud Landscape 2020 was a bad year for fraud, writes senior editor of ASIS International’s Security Management magazine Megan Gates, yet fraud incidents remain woefully un-investigated and staggeringly unreported.
As long as there’s been currency, there’s been fraud. But not until the 21st century was it so easy for fraudsters to engage in illicit activity, reap the rewards, and evade prosecution and incarceration for their crimes.
Megan Gates is Senior Editor at ASIS International’s Security Management magazine. She joined the Security Management team in 2013 after graduating from Missouri State University with a Bachelor of Science in Journalism.
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In a survey of more than 5,000 respondents across 99 global territories in 2020, PricewaterhouseCoopers (PwC) found that 47 percent had suffered at least one form of fraud in the prior 24 months—averaging six per company. These were commonly customer fraud, cybercrime, asset misappropriation, and bribery and corruption, which cost $42 billion. Yet only 56 percent of respondents say their organisations investigated their worst incident; just over onethird of respondents said they reported the incident to their boards. “Fraud committed by customers tops not only the list of external perpetrators (at 26 percent) for the most disruptive fraud, but also the list of all crimes experienced (at 35 percent, up since 2018),” PwC said in its Global Economic Crime and Fraud Survey 2020. “Not surprisingly, customer fraud is especially prominent in the financial services and consumer market sectors. This could be significant, as more industries shift to direct-to-consumer strategies.” The losses from fraud, however, can be difficult to calculate. Some
of them represent exact financial figures—like costs due to fines, penalties, responses, remediation, and direct financial losses. But others cannot, including brand damage, employee morale, and lost future opportunities. “Some frauds—such as external frauds—generally strike from outside the company, are transactional in nature, lend themselves to active monitoring, and when managed properly may reduce financial impact,” PwC explained. “For other frauds like bribery and corruption, or those internally perpetrated, it’s more about managing and mitigating the downside risk. They tend to be harder to predict, monitor, and result in more costly fines—and have ancillary repercussions such as lost business or brand harm.” In February 2021, for instance, Europol, the Spanish National Police, and the U.S. Secret Service announced the dismantlement of an organised crime group implicated in a vast fraud and money laundering scheme involving 105 people and 50 financial institutions. Dubbed Operation Secreto, the cross-border operation detected the criminals who had set up shell companies in the United States and opened bank accounts for those organisations that they transferred money into from different locations in the European Union.
October/November 2021
