Financial crimes cost: Despite high spends on compliance, firms across the world remain highly vulnerable to financial crimes, as nearly 50% of large APAC organisations have been victims of fraud, theft, money laundering or other financial crimes in the last one year, says a report. Despite firms allocating about 3.1% of their annual spend towards combating financial crime, nearly 50% of the organisations admitted to having gone through the same in their organisations, a report by Thomson Reuters said. The survey, which covered organisations in about 19 countries with more than 2,373 participants said that responses indicated that 47% across the globe had been the victim of at least one of the many financial crimes. For the purposes of the study, ‘financial crime’ included bribery and corruption; money laundering; fraud; theft; cybercrime; and slave labor/human trafficking.
In a shocking revelation, the study revealed that the world loses unimaginable amounts to financial crimes–money that could have otherwise been used for more gainful purposes such as health and education. “Within each country surveyed, we calculated the sum of the published turnover (last 12 months) of listed companies with a turnover of USD$50 million or more and applied a global estimate of lost turnover as a consequence of financial crime at 3.5%, giving a global estimated loss of turnover of just over USD$1.45 trillion,” said the report.
The report observed that the true cost of such crimes must be measured in terms of their financial, social and humanitarian impact. Decoding how much a fraction of that amount i.e, $1 billion can mean to various countries, the report makes the larger point that costly compliance processes are simply inadequate when it comes to screening vast international third party networks for any links to financial crime.
According to the report, $1 billion could pay for high quality early years education for 150,000 toddlers in Spain, while in Russia, $1 billion could provide 180,000 toddlers with the foundations they need to become fluent learners at school. “In Mexico, it would mean 327,000 additional children placed in primary and secondary schools; and in India $1 billion could build 2,000 more schools. In Poland, this money could pay for 64,000 additional teachers, or 21,000 in the USA,” Thomson Reuters report said.