In today’s global market and business landscape, companies are always facing with navigating the murky business waters. Especially after the recent global economic meltdown. They are always looking to balance risk with cost and opportunities.
The increasing regulatory standards in Singapore couple with the concentrate efforts by authorities and companies to strengthen. What exactly are they trying to strengthen? It is the measures use to detect, prevent, and combat fraud. This allows Singapore to maintain its position as a safe place to conduct business. It has also allow Singapore to experience a lower crime rate compare to both the Global as well as Asian Pacific markets.
The successes of local businesses and the ability to attract foreign companies to establish a business presence in Singapore is, in part, due to the business-friendly environment of the country. Despite all that, companies still need to remain vigilant. Especially as more and more businesses get integrated into regional and global economies.
Due to the greater threats and risks of economic crime in the higher risk territories outside of Singapore, the regulatory standards that have been producing lower crime rates in Singapore may prove to be less active in these higher-risk regions. Additionally, the level of confidence and trust companies in Singapore have in their local law enforcement agencies may be less or completely absent in such high-risk territories.
It is crucial that businesses understand these challenges. Businesses must know the appropriate measures that are available to navigate their way through the murky waters of bribery and corruption. Furthermore, even more, modern and sophisticated cybercrimes. What this essentially means is that organizations need to be aware that these risks exist. They should be ready to mobilize help, both internal and external when the need arises.
One out of five companies based in Singapore has experienced some form of economic crime in the past two years. As at 2016, the rate of economic crime is 22 percent. This figure has to remain unchanging for the most part since 2014 where it is at 24 percent. The percentage of business crime has consistently been below the global average of 36 percent.
Unfortunately, the percentage of organizations that have suffered fraud in the last two years in the Asia Pacific has been over 30 percent which is statistically closer to the global average. While this value is on the high side, it is however not unexpected and fits in with the perception of increased risk of corruption and lower levels of corporate governance within that region. This contrast between regional and domestic environments presents a serious challenge for a lot of Singapore-based corporations as they operate a lot of cross-border business activities.
Although the Singaporean government is well known for its zero-tolerance policies towards corruption and fraud. And even with the strict corporate governance, robust legal framework and strong tone, economic crime remains a credible threat in Singapore.
Top 5 Economic Crimes in Singapore
The five most recurring financial crimes in Singapore reported in a survey carried out in 2016 include; cybercrime, asset misappropriation, procurement fraud, money laundering, and finally bribery and corruption.
1. Asset Misappropriation
The most common type of economic crime experienced in Singapore and globally is asset misappropriation. Asset misappropriation includes theft and embezzlement of cash, company assets, and inventory by employees or management. The percentage of asset misappropriation in 2016 is 61 percent which is the lowest since 2009.
While this may appear encouraging, it does not necessarily mean that fraud incidents are reducing drastically. What it can mean is that fraudsters are becoming more and more sophisticating in their approach. Thus, more cases are not discovering. Under these circumstances, it is important for organizations to continue monitoring and assessing risks as the business develops and evolves.
The number of cyber criminals in Singapore has been increasing gradually. The 2016 survey showed that cyber-related crimes have seen a sharp increase and is now the second most predominant economic crime in Singapore.
About 43 percent of individuals that suffered an economic crime were affected by a cyber-incident compared to the 15 percent recorded in 2014. In addition to this, the number of corporations that suspect they’ll be hit by cybercrime in the coming 24 months rose up to 37 percent all the way from 11 percent in 2014.
Cybercrime can be costly for companies that have been hit. Apart from the direct cost damage, the secondary cost that can arise from illicit cyber activities is also of great concern. About 13 percent of Singapore-based companies reported a direct loss with an estimated range of $100,000 all the way to US$1 million because of cyber crimes.
3. Procurement Fraud
From the survey carry out, we can see that Singapore base companies experience a higher rate of procurement fraud. It is about 35%. As compare to that of their Asia Pacific counterparts, which is only 27%. More than half of the individuals (an estimated 75) who have had firsthand experience with procurement fraud reported that the incident occurred during the initial stages of the acquisition process, that is, the bidding and vendor selection process.
Due to the downturn experienced by global and regional economies, most organizations are deciding to scrutinize their cost centers and implement measures to help them cut cost. Typically, the procurement depart department is one unit that is likely to come under scrutiny. When implementing cost cutting measures, organizations should be mindful. Why? This is in order not to compromise already existing controls put in place to reduce the risk of procurement fraud.
4. Money laundering
In the last few years, the Monetary Authority of Singapore has been carrying out a broad range of anti money laundering inspections. This is doing on several financial institutions located in Singapore. The increase scrutiny by regulators may have led to the discovery of Anti Money Laundering (AML) and Countering Financing of Terrorism (CFT) related violations. The percentage of money laundering incidents reported in 2016 was 26 percent compared to the percent recorded in 2014.
5. Bribery and Corruption
Although the recorded number of bribery and corruption cases in Singapore is 17% which is still considerably lower. This is low when compare to the regional average of 28%. It remains one of the leading economic crimes Singapore base companies suffer. As a result, Governments around the region are continually stepping up enforcement. By building better cross border cooperation among enforcement agencies compared to before. The laws are also being tune to bring more clarity and focus to bribery and corruption offenses.
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