Almost three-quarters of firms fall prey to financial crime: study

Study by Refinitiv shows 73% of respondents in Middle East are aware of the incidence of financial crimes

 In 2018, $1.45 trillion of aggregate turnover is lost as a result of financial crime.
In 2018, $1.45 trillion of aggregate turnover is lost as a result of financial crime.

Almost three-quarters (72%) of organisations have been victims of financial crime over the past 12 months, a new study by Refinitiv shows. Across the Middle East, 73% are aware of the incidence of such crimes, spiking to 85% in KSA.

This was outlined in the second annual financial crime report titled “Innovation and the fight against financial crime: How data and technology can turn the tide” by Refinitiv, a provider of financial markets data and infrastructure.

A lax approach to due diligence checks when onboarding new customers, suppliers and partners was creating an environment in which criminal activity can thrive, the study concluded.

In the 2018 report, Refinitiv outlined that $1.45 trillion of aggregate turnover is lost as a result of financial crime. This year’s report shows that the cost could indeed be much greater.

Globally, over half (51%) of external relationships did not have an initial formal due diligence check at the onboarding stage and this situation was echoed by the same percentage of respondents across the Middle East. 

An average of 4% of global turnover is spent on customer and third-party due diligence checks, rising to 5% in the UAE. According to the report, 100% in KSA and 99% in the UAE believe that technology can significantly help with financial crime prevention. About 61% of respondents in the UAE and 88% in KSA struggle to harness technological advancements, while 52% in KSA are prioritizing automation and digitization for investment.

About 85% of respondents in MENA, rising to 92% in KSA, believe humans are a necessary asset to source trusted data and train algorithms. More than 95% in KSA (the highest in the region) consider that the benefits outweigh the risks when sharing information and collaborating against financial crime.

A significant majority (78%) across the region are struggling to harness technological advancements and a lack of digitization is evident, which may be stalling progress.  Across the region just 53% of the data and legal documentation actually obtained to carry out due diligence is in a digitized format.

Most Popular

Digital Edition

Subscribe today and get your copy of the magazine for free