Nicholas Cameron, a partner at KPMG and the head of the criminal services department in the Middle East, highlighted that the Middle East and North Africa (MENA) region has become a prime target for corporate fraud. This is largely due to its rapid economic growth, increasing individual wealth levels, and fast adoption of modern technology.
He emphasized the necessity for organizations to bolster their defenses by utilizing advanced analytical tools, implementing immediate fraud detection systems, and conducting regular reviews of their existing strategies. Organizations should also prioritize transparency and encourage collaboration among different departments to reduce the chances of collusion and organized fraud within the workplace.
The UAE’s Ministry of Economy and Tourism is actively collaborating with federal and local governmental bodies, as well as the private sector, to enhance legislation aimed at combating fraud. These collaborative efforts have significantly strengthened the UAE’s position as a leading global center for trade, business, and innovation.
A study by KPMG has revealed a concerning increase in corporate fraud rates in the MENA region. Titled “Global Patterns of Corporate Fraud,” the report addressed the evolving nature of financial embezzlement, urging companies to enhance their internal monitoring systems and cultivate a corporate culture of integrity to effectively detect fraud.
The findings indicate that weak internal controls are the main reason behind successful fraud attempts across various departments, including operations, finance, and procurement, extending even to the CEO’s office. The typical profile of a fraudster tends to include long-standing employees with good reputations within the company, typically aged between 36 and 55 years.
Study Highlights
According to KPMG’s report findings, approximately half of the fraud cases (55%) are perpetrated through collusion, often involving groups of two to five individuals. The majority of these cases (78%) involve amounts less than $200,000. Asset misappropriation, particularly through embezzlement or procurement manipulation, remains the most frequent type of fraud, constituting 52% of recorded cases.
This figure marks a 7-point decline compared to KPMG’s previous report, likely due to the increased opportunities technology presents for committing fraud individually. The most common method of fraud detection was reporting (45%), either through formal reporting lines or anonymous and informal sources.
Interestingly, the study uncovered that many fraud schemes are still executed using traditional methods, despite the widespread availability of technological applications. While emerging technologies can enhance detection capabilities, implementing essential internal controls is crucial for establishing robust protections. The study underscored the importance for organizations to stay updated on the latest technological developments, invest in cybersecurity systems, and educate employees on identifying and effectively responding to threats.