Adjusting the Lens on Economic Crime Preparation brings opportunity ... Cyprus_GECS 2016... · PwC...

Global Economic Crime Survey 2016Country summary: Key findings in Cyprus

Adjusting the Lens on Economic CrimePreparation brings opportunity back into focus

www.pwc.com.cy/crimesurvey

June 2016

PwC

Agenda

1. Introduction

2. The Big Picture

3. Cybercrime

4. Ethics & Compliance

5. Anti-Money Laundering

2June 2016Global Economic Crime Survey 2016 - Cyprus Country Report

PwC

Introduction


PwC

Size, scale and depth of the survey

Global


PwC

Size, scale and depth of the survey

Cyprus


PwC

Economic crime an obstinate threatCyprus is not immune

Percentage of respondingorganisations that experiencedeconomic crime


PwC

Need for controls to be embedded in cultureThreats come from both within and outside organisations

2 in 5 organisations have notcarried out a fraud riskassessment in the past 24 months


Financial damage extendingto millions of US dollarsin some cases

PwC

The Big Picture


PwC

Economic crime is evolving but preventativemeasures are lagging behind

Has your organisation experienced any economic crime within the last 24 months?

However, a worrying trend may be getting masked: Economic crime may bechanging significantly, but detection and control programmes are not keepingup with the pace of change.

27%

69%

4%

31%

65%

5%

Yes No Don't know

2016 Cyprus

2014 Cyprus

Western Europe


PwC

Top three most commonly reported types ofeconomic crime 2016

Age-oldcrimes lead,

but onepervasive

enemy jumpsahead

Our findings show that asset misappropriation ranksas the top economic crime, with 58% of respondentssuffering from it. This is followed by cybercrime(25%), money laundering (25%) and accounting fraud(21%).


PwC

Types of economic crime experienced

The most pervasiveeconomic crimesreported by ourrespondents for

2016

58%

25%

25%

21%

13%

13%

13%

8%

4%

4%

4%

8%

0%

0%

54%

42%

11%

16%

7%

4%

12%

5%

6%

2%

15%

14%

2%

9%

Asset Misappropriation

Cybercrime

Money laundering

Accounting Fraud

Tax Fraud

Mortgage Fraud

Bribery and Corruption

Competition Law/Anti-Trust Lawinfringement

Intellectual Property (IP) infringement

Insider trading

Procurement Fraud

Other

Espionage

Human Resources fraud (recruitmentand/or payroll fraud)

Cyprus

Western Europe


PwC

Perception of law enforcement

Do respondentsbelieve local lawenforcement agenciesare adequatelyresourced andtrained to investigateand prosecuteeconomic crime?

We asked respondents to give us their views on whether they believe local law enforcement to be adequately resourcedand trained to investigate and prosecute economic crime.

Less than a quarter (24%) of our respondents were positive while the majority (45%) did not know what to answer.


PwC

Financial impact of economic crime

Smaller crimes are on therise

Increased number of respondentsexperienced losses of $100,000or less

while

losses of more than $100.000reduced significantly

These are still substantial sums ofmoney.

54%

17%

8% 8%

13%

41%

7%

33%

7%

11%

Less than50,000 US

dollars

50,000 to100,000 US

dollars

100,000 to 1million US

dollars

1 million to5 million US

dollars

5 million to100 millionUS dollars

More than100 millionUS dollars

Don't know

Approximate losses through incidents ofeconomic crimes over the last 24months?

2016 Cyprus

2014 Cyprus

Western Europe


PwC

Cybercrime


PwC

Cybercrime is a boundless threatGlobal results of the survey


PwC

Perception of the risk of cybercrime

Ready or not?Over half of our survey

respondents, 56%, see anincreased risk of cyber threats,perhaps due to intensifying mediacoverage.

But…

Our survey suggests thatcompanies are nonethelessinadequately prepared to facecurrent cyber threats.

56%

39%

6%

64%

35%

2%

Increased Remained the same Decreased

Cyprus

Western Europe


PwC

Cyber threat vectors: the five categories

12

34

5


PwC

Boards are not paying enough attention

Frequency ofrequests forinformationby boardsregardingorganisations'ability to dealwith cyberincidents

8%

13%

18%

28%

18%

1%

14%

8%

17%

20%

20%

11%

5%

20%

Monthly

Quarterly

Annually

Board members do not request thisinformation

Board members have not considered theneed for this information

Other (please specify)

Don't know

Cyprus

Western Europe


PwC

Cyber Incidence Readiness

Percentage ofrespondents withfully operationalIncident ResponsePlans

32%

25%don’t have a plan

&

27% of these

don’t think theyneed one


PwC

First Responder Teams

41%

Fully trained to act asneed arises

12% 9%

Personnel yet to betrained

Outsourced

Have organisations identified FirstResponder Teams?

6% 4% 14%

Assessing feasibility ofidentifying personnel

Assessing feasibility ofsourcing an extremal

provider

Organisation feels itdoes not need first

responders


PwC

First Responder Teams

70%

IT Security

61% 50%

IT staff (with understandingof entity / organisation IT

environment)

Senior levelmanagement

Composition of First ResponderTeams

16% 11% 7%

Attorney (to providelegal advice)

Human resourcesrepresentative

Digital forensicinvestigator


PwC

Ethics & Compliance


PwC

Aligning decision-making with valuesGlobal results of the survey


PwC

Bribery and corruptionPercentage of organisations asked to pay a bribe

17% of respondents said that they don’t knowif their organisation was asked to pay a bribe.

5%

7%

Cyprus

WesternEurope


PwC

A worrying 42%of organisations have notcarried out a fraud riskassessment in the past 24months…

Aligning decision-making with values

Our survey results show that not only is thenumber of economic crime risks increasing, so tooare the complexity of those risks and the role thattechnology plays.

A risk-based approach to ethics and compliance– one that begins with a holistic understanding of acompany’s economic crime risk, and anunderstanding of where compliance weaknessesare – is a must-have.

From that position of clarity, a company can createan effective programme that mitigates those risks.

…while 8% do notknow if they have doneso.


PwC

Responsible people want to work for responsiblecompanies

66% of companies rely on internalaudit to ensure effectiveness of their

programmes…t

This could be further enhanced bytaking more proactive measures likeperforming a fraud risk assessment,

which can reveal the weak spots.

Currently only 5% of respondents saythey are using other,

promising external and internalmonitoring approaches

7 in 10 of companies say they have a formal plan in place

and

35% of respondents say that responsibility lies with Chief

Compliance Officer


PwC

Is your compliance programme fit-for-purpose?

4 key areas of focus for enhancing the effectiveness of ethics and compliance programmes:

1.People and cultureMaintaining a values-based programme, measuring and rewarding desired behaviour

2.Roles and responsibilitiesEnsuring they are correctly aligned with current risks

3.High-risk areasBetter implementation and testing of the programme in high-risk markets and divisions

4.TechnologyBetter use of detection and prevention tools, including big data analytics


PwC

Anti-Money Laundering


PwC

Money laundering destroys valueGlobal results of the survey


PwC

Rising costs as regulatory focus on moneylaundering increases

With the rising visibility of terrorist attacks, money laundering and terrorist financingare escalating in priority for governments across the globe

But it’s not just financialservices institutions

Any organisation that facilitatesfinancial transactions – includingnon-bank money servicebusinesses such asdigital/mobile paymentservices, life insurers andretailers – is also coming within thescope of anti-money laundering(AML) legislation worldwide.

Alarmingly, but notsurprisingly, many of thesenew participants are not yet upto speed on the requirementsthey must meet or on thecompliance programmes theywill need.

By 2017,globalspending onAMLcomplianceis set to growto more than…

billion


PwC

What does this mean for your organisation?

With the globalisation of AML/CFT standards, it’s important to rememberthat you may be judged by the highest international compliance standards.

Here are 3 action points to consider:

1. Keep your finger on the regulatory pulse

Look beyond mechanical compliance with today’s laws. Instead, look ahead and examine how toproperly structure to comply with upcoming legislative trends. Focus on having a viable functionwithin the organisation that keeps track of pending regulations in this area.

2.Lead the pack; don’t follow

Being in the middle of the pack exposes you to the risk of falling behind the regulatory curve.Focus on being strategically nimble and innovative to help you stay on top of the regulatorychanges.

3.Learn from others’ mistakesFew organisations are known to actively investigate the root cause of significant issues asidentified by regulators. Remediation often serves as a quick solution to address regulatoryfindings.


PwC

Know your customer(KYC)

Transparency into your customerbase goes beyond merelyidentifying and verifying theinformation they provide. It mustbe a dynamic act, and it isessential to keep monitoring forred flags and suspicious activity ona regular basis. Special attentionshould be paid to clients’ businessrelationships and transactions –especially when they conductbusiness with persons residing incountries with weak or insufficientAML regulations.

Your customers, your people, your risks…

Your people, yourprocesses

Global results show thathiring experienced staff isthe most significantchallenge faced in the AMLarena in relation to the paceof regulatory change.

Risk assessments arecritical

Over the last decade,improved money launderingcontrol measures in theformal financial systems haveforced criminals to seek newways to “move” the proceedsof their crimes. That’s whyregular risk assessments arecrucial, enabling yourorganisation to identify andaddress the moneylaundering and terroristfinancing risks you face –wherever and with whomeveryou do business.


PwC

Key Contacts:

This content is for general information purposes only and should be used as a substitute for consultation with professional advisors.

© 2016 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Cyprus member firm, and may sometimes refer to the PwCnetwork. Each member firm of which is a separate legal entity. Please see www.pwc.com/structure (http://www.pwc.com/structure) forfurther details.

Forensic Services,Anti-Money Laundering,Ethics & Compliance

Cyber Security

George LambrouPartner, Consultingt: +357 22 555 728e: [email protected]

Tassos ProcopiouPartner, Consultingt: +357 22 555 750e: [email protected]

Demetra EllinaDirector, Consultingt: +357 22 555 732e: [email protected]

Efthyvoulos EfthyvoulouSenior Manager, Consultingt: +357 22 555 460e: [email protected]

Nicholas RoussosSenior Manager, Consultingt: +357 22 555 055e: [email protected]


Adjusting the Lens on Economic Crime Preparation brings opportunity ... Cyprus_GECS 2016... · PwC...

Documents

Transcript of Adjusting the Lens on Economic Crime Preparation brings opportunity ... Cyprus_GECS 2016... · PwC...