Africa has a higher percentage of companies affected by fraud, theft, money laundering or other financial crimes than the global average, according to one of the most comprehensive surveys of international business to date, a Thomson Reuters survey showed.
More than 2 300 senior business leaders in large companies were asked to shine a light on how pervasive such crimes have become across the world.
The report, entitled Revealing the True Cost of Financial Crime, shows that 53% of people questioned in Africa, and 47% of respondents globally, admitted that their organisation had suffered at least one incident of financial crime over the past 12 months. Cybercrime and fraud were cited as the most common financial crimes.
The companies surveyed estimated a total aggregated loss of $1.45trn, or about 3.5% of their global turnover.
The difficulty of tackling financial crime was highlighted in the survey. Thomson Reuters found that many organisations questioned do business with more than five million customers or clients every year, and 9% of organisations have dealt with over 10 000 third-party vendors, suppliers or partners over the last 12 months.
According to the report, only 36% of relationships are however regularly screened for criminal connections. The survey suggests that 41% of parties that respondents did business with over the past 12 months were not screened at all.
An astonishing 41% of known instances of financial crime are not reported, either internally or externally. The reasons behind this include a high rate (69%) of detected bribery and corruption involving someone internally.
Companies are also reticent to report due to reputational damage and financial loss – 60% of the publicly listed companies surveyed stated there would be a significant negative impact on investor confidence if such crimes came to light.
About 46% of respondents think money laundering leads to higher prices for consumers, and 42% believe it leads to lower government revenues.
Modern slavery and forced labour
The human cost of financial crime is also significant. The Global Slavery Index estimates that over 40 million people today are in modern slavery, including forced labour, and many countries in Africa are impacted by this.
Almost all those surveyed globally and in Africa recognised that greater collaboration is vital to winning the war against financial crime, with 94% of companies believing there should be more sharing of financial crime intelligence, while 93% said that public-private partnerships should be increased and improved.