The number of regional firms reporting incidents of financial fraud rose to 34 percent from 26 percent over the past two years, according to a PwC survey.
Asset misappropriation, business misconduct, and fraud committed by consumers are the three most frequent types of economic crime reported by respondents, costing 46 percent of respondents between $100,000 and $50 million dollars, the survey said.
Internal audit was the main contributor to detecting the most disruptive fraud experienced by respondents in the last 24 months (20 percent) followed by internal tip-offs (18 percent), and fraud risk management and suspicious activity monitoring (both at 14 percent).
“Social and environmental pressures are increasing the focus on fraud and economic crime issues across the region. This rise is unsurprising as these issues are becoming more acute within organizations,” said Forensic Leader at PwC Middle East Nick Robinson. “Our 2018 Middle East Economic Crime and Fraud survey highlights the need for organizations to take proactive steps towards understanding fraud more comprehensively by uncovering fraud blind spots and taking necessary action to prevent it.”
Fraud instigated by internal fraud actors is increasing rapidly, the survey said, accounting for 48 percent of economic crimes reported in the Middle East, slightly below the global average of 52 percent. Senior and middle management are the main perpetrators of internal fraud, accounting for 62 percent of those reported.
The survey showed the proportion of organizations that have performed a fraud and economic crime risk assessment within the past 24 months has leapt to 77 percent in 2018 from 47 percent in 2016.
To tackle fraud, 42 percent of organizations have reportedly increased the amount of money allocated to combating fraud and economic crime within the past 24 months, the same proportion as at a global level. And 49 percent plan to increase it in the next 24 months, ahead of the global figure of 44 percent—indicating that the focus on fraud is set to rise more quickly in the Middle East than elsewhere, the survey said.