Singapore fraud, economic crimes hit new peak; those by external parties surge

Singapore

IT appears that traditional white collar crimes in Singapore are falling; but those involving tech-savvy external perpetrators are soaring.

PwC's biennial Global Economic Crime and Fraud Survey 2020 report on Singapore showed that despite the traditional safe domestic environment, half of the crimes in the city-state over the past two years were committed by external perpetrators, up from 31 per cent in a 2018 study. The proportion by internal perpetrators fell from 54 per cent in 2018 to 28 per cent in 2020.

Fraud and economic crime rates are at record highs, with 42 per cent of Singapore-based companies experiencing such crimes over the past two years, compared to 35 per cent in 2018. Globally, 47 per cent of companies surveyed experienced fraud or crime in 2020, commpared to 49 per cent in the 2018 study.

The spike in numbers was attributed to Singapore's increasing global exposure, challenging economic conditions pushing some to commit fraud and higher detection by companies and law enforcement agencies including white-collar crime buster, Commercial Affairs Department (CAD), and the Monetary Authority of Singapore (MAS).

Businesses are hurting. Close to one in four respondents suffer direct financial losses exceeding US$50 million, while 31 per cent reported losses between US$1 million and US$50 million and the rest below US$1 million.

This situation may be partially explained by the fact that a higher percentage of Singapore survey participants - about 27 per cent - belong to large organisations with revenue above US$5 billion, to 17 per cent of the global ones.

"Large companies typically report higher occurrence of economic crime due to their complex business operations. In Singapore, 53 per cent of companies with revenue over US$1 billion reported fraud and economic crime, compared to only 29 per cent for those with revenues below US$500 million,'' Michael Peer, Singapore Forensic Leader, PwC South East Asia Consulting, said.

Most of the Singapore respondents come from various sectors, namely, financial services, banking and capital markets; technology; consumer products and retail; engineering and construction; industrial products and manufacturing; as well as energy, including oil and gas.

At 46 per cent, customer fraud including mortgage fraud and credit card fraud was identified as the most prevalent economic crime. It was followed closely by cybercrime at 41 per cent, with financial services and technology industries heavily targeted due to the nature of their business. Intellectual Property (IP) theft has also shown a substantial increase.

The most serious breach of personal data in Singapore's history took place in 2018, with 1.5 million SingHealth patients' records stolen while 160,000 of those had their outpatient dispensed medicines' records taken too. That year alone, close to 20,000 Singaporean bank cards showed up for sale on the dark web, while hundreds of credentials from Singaporean government agencies and educational institutions were stolen over the years, according to Group IB.

PwC report showed traditional white collar crimes, such as asset misappropriation, procurement fraud, accounting fraud, bribery and corruption are falling. This suggests controls and prevention methods deployed by companies have been effective in contributing to the drop in fraud cases.

The report noted that the exposure of Singapore-based companies to the risk of bribery and corruption seemed mainly related to their cross-border business activities.

Reported incidence of bribery and corruption for Singapore-based companies fell to 15 per cent in 2020, from 20 per cent in 2018.

"This decrease is correlated with an increase in the proportion of companies with dedicated efforts on anti-bribery and anti-corruption compliance programs from 34 per cent in 2018 to 38 per cent in 2020,'' Mr Peer said.

But the threat has not gone away. The global rate of bribery and corruption risen from 25 per cent in 2018 to 30 per cent in 2020, while the incidence rate in South East Asia rose from 29 per cent in 2018 to 31 per cent in 2020.

"In this context, it is not surprising that an increasing proportion of Singapore-based companies reported that they have been asked to pay a bribe or had lost an opportunity to a competitor which they believe had paid a bribe,'' Mr Peer said.

Interestingly, only half of the respondents here conducted an investigation when an incident occurred. Some did not even have any formal risk assessment in place to evaluate their risk exposure.

Mr Peer warned that without a clear understanding of the root cause of the incident, it would be difficult for companies to take the appropriate measures to manage the risk and be confident that they have put the right controls in place to mitigate the risk of history repeating itself.

Looking at the bigger picture, companies in Singapore were not as well placed as their global peers. About 70 per cent of respondents believed that they were in a similar or worse position after the incident compared to their situation prior to the incident. In contrast, globally, only 55 per cent of organisations felt that they were in a similar or worse place.

The Global Economic Crime and Fraud Survey examined over 5,000 responses from 99 countries between August and October 2019. In Singapore, there were 92 respondents.