Risk

How financial criminals make an impact on your business and the South African economy

To reach their critical development goals, emerging markets can ill afford to lose funds through tender fraud, money laundering and other forms of corruption; yet this loss of funds is at an all-time high and is increasing, with the December 2014 Illicit Financial Flows from the Developing World: 2003-2012 report by Global Financial Integrity showing that the developing world lost US$6.6 trillion in illicit financial flows from 2003-2012.

Impact of financial crime on the South African economy

Despite the country’s advanced regulatory standards, too few of South Africa’s financial criminals are being prosecuted, or at the very least, getting caught, which leads to a perpetuation of the problem and a resulting devastating effect on South Africa’s ability to grow its economy, build infrastructure and create jobs due to loss of funds. Not to mention that countries seen as having a low risk of prosecution will deter investors.

But amendments to the Financial Intelligence Centre Act are expected to “significantly enhance” the compliance regime to ensure that standards are adhered to, and even then, regulators need more support and resources. To nip all the criminal activity in the bud, up-skilling of professionals tasked with making this happen and increasing their tools and resources will be crucial.

What does this mean for your business?

SA loses roughly an average of $12 billion every year, which would be about R150 billion at today’s exchange rate, and the key to tackling the problem is to spot and deter motive, opportunity and rationalisation of such crimes, but organisations are rarely one step ahead.

You can help protect your business by embarking on the following:

Having in-house fraud risk assessments to spot vulnerabilities

  • Conducting anonymous surveys of staff
  • Educating staff
  • Assessing industry benchmarks and risk registers
  • Employing forensic data analytics and continuous control monitoring and
  • Using anonymous reporting facilities

Contact

Anthony Smith
Associate Director, Risk Advisory: Forensic
Email: asmith@deloitte.co.za
Tel: +27 11 209 8445

About the author

Anthony Smith

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