Financial Crimes Survey Presentation

8/13/2019 Financial Crimes Survey Presentation

1/27

Financial Crimes SurveyRe ort 2013

Where is the exposure?

Robert Nyamu

Director, Deloitte Forensic Services East frica


2/27

Contents

Overview

Prevalence, modes and impact

Financial crime prevention and

AML regulatory frameworks acr

2

of financial crimes

detection mechanisms

oss East Africa

2013. For information, contact Deloitte & Touche


3/27

Overview

3


4/27

Respondents by Sector

4

The spread of respondents per sector

was as follows: Banking sector 69%

Insurance 25%

Real Estate 3% and

Capital Markets 3%



5/27

Asset Base of Respondents

5

63% of the respondents have an asset

base of over US$ 3.5M10% have an asset base of betweenUS$ 1.2M and 3.5M



6/27

Domicile of respondents

6

The spread of respondents in the region

was as follows: 38% are based in Kenya.

22% are based in Uganda

22% have a Regional Presence

9% are based in Tanzania

9% have a Global presence



7/27

Prevalence,mpac s ocrimes

7

odes and anc a


8/27

Prevalent forms of financial cri

8

The top three most prevalent forms of financial cri

Cash theft at 72% in Kenya, 67% in Uganda an

Cheque fraud at 44% in Kenya, 50% in Ugand

Asset misappropriation at 33% in Kenya, 25% i

e


e across East Africa are:

d 71% in Tanzania.

and 14% in Tanzania.

n Uganda and 29% in Tanzania.


9/27

Common ways of perpetrating f

9

inancial crimes

Across East Africa, perpetration of

financial crimes commonly involvesa combination of internal andexternal parties.



10/27

Most likely to perpetrate interna

10

l financial crimes

Across the region, most respondents

indicated that non-management personnelwere most likely to perpetrate financialcrimes in the organisation.

It is interesting to note that it is only in Kenyawhere senior management is considered

likely to perpetrate financial crimes within theorganisation



11/27

Likely causes of prevalence of f

In Kenya, 57% of the respondentsfeel that the most likely cause offinancial crimes is the abundant

liquidity in the industry which makes itattractive to fraudsters.

In Uganda, 50% of the respondentsfeel that the most likely causes offinancial crimes are:

Abundant liquidity in the industrywhich makes it attractive to

Weak or inadequate financialcrimes controls; and

Manipulation of data andcircumvention of IT controls.

In Tanzania, 50% of the respondentsfeel that the most likely causes offinancial crimes are:

Weak or inadequate financialcrimes controls; and

Diversity of products which are

not matched with robust controlsmechanisms.

11

inancial crimes



12/27

Prevalence, modes and impact

Extent of threat posed by financial crimes

When asked if financial crimes are posing a

serious threat to the growth and expansion of theindustry, most of the respondents in the regionstated that it was a threat, but only to a smallextent

Perceived extent of annual losses throughfinancial crimes

12

36% of respondents in Kenya and 25% ofrespondents in Tanzania stated that the industry islosing more than ten million US dollars as a resultfinancial crimes annually.

In Uganda, 29% of therespondents stated thatthe industry is losingbetween one million andten million US dollars asa result of financial crimesannually

of financial crimes


f


13/27

Perceived extent of annual loss

19% of the respondents in the bankingsector feel that annual losses are likely to

be above ten million dollars.

13

s in key sectors


In the insurance sector, 25% of therespondents feel that annual losses arelikely to be above ten million dollars


14/27

Impact of financial crimes

Across the region, 100% of the respondents feel threputational damage.

In Kenya, this is followed by actual financial loss atactual financial loss both at 50%.

In Tanzania, 100% of the respondents also feel tha

organizations.

14 2013. For information, contact Deloitte & Touche

t the greatest impact of financial crimes is

71%, in Uganda by regulatory & legal risks and

t actual financial loss has a great impact on their


15/27

Financial cripreven on anmechanisms

15

e e ec on


16/27

Financial crimes prevention me

In all three countries, the majority of the respondenduties & job rotation as mechanisms to mitigate fin

In Kenya, the second most commonly used mecha

background checks on employees prior to recruitm

16

hanisms


s stated that they have implemented segregation of ncial crimes.

ism to mitigate financial crimes is conducting of

nt.


17/27

Financial crimes detection mec

17

anisms

Across East Africa, most

respondents conduct riskbased internal audits:

100% in Kenya;

83% in Uganda; and

100% in Tanzania.

Most organizations also


con uc r s asetransaction monitoring onan ongoing basis:

71% in Kenya;

67% in Uganda; and

50% in Tanzania


18/27

Effectiveness of financial crime

mechanisms

Prevention

Majority of the respondents stated that the

financial crimes prevention mechanismswere effective in their organizations.

However, a small minority in Kenya who feelthat the mechanisms in place were noteffective.

18

prevention and detection


Detection

Majority of respondents stated that financial

crimes detection mechanisms are effectivein their organizations. 17% of therespondents in Uganda and 21% of therespondents in Kenya stated that thefinancial crimes detection mechanisms inplace are very effective in their organizations


19/27

Financial crime prevention and

Transaction monitoring systems

Across the region, 67% of banks do not have

and reporting of suspicious and cash transactsystem.

None of the insurance companies have an aureporting of suspicious and cash transactionsthat they have virtually no cash transactions

19

detection mechanisms

automated systems to facilitate monitoring

ions, while 5% have a semi automated

tomated system to facilitate monitoring and . Some of the insurance sector players stated



20/27

Remediation measures

Across the region, 86% of the banks stated th

program to fill in gaps in customer due diligen88% of insurance companies stated that they

20

t they have a retrospective remediation

e information for existing customers, while o not have such measures in place.



21/27

Responsibility for dealing with

organization

The majority of the respondents in Kenya and

and senior management are responsible for dorganizations.

The majority of the respondents in Uganda stcompliance team as well as senior managemorganizations

21

inancial crimes in the

Tanzania stated that the internal audit team

ealing with financial crimes in their

ted that it is the responsibility of the risk and nt to deal with financial crimes in their



22/27

AML regulatoramewor s aAfrica

22

ry ross as


23/27

Perceived effectiveness of AML

A majority of the respondents in Kenya and T

framework is effective in combating financialUganda feel that the framework is not effectivdue to the lack of the necessary legislation.

23

regulatory framework

anzania feel that the AML regulatory

rimes. However, 83% of the respondents in e in combating these vices, which should be



24/27

Perceived effectiveness of AML

sectors

67% of the respondents from the banking sec

insurance sector stated that the AML regulatofinancial crimes.

24

regulatory framework for key

tor and 50% of the respondents from the

ry framework is effective in combating



25/27

Existence of AML compliance f

Across the region, the majority of the orgAML compliance frameworks in place.

25

ameworks for key sectors

nizations stated that they have



26/27

Components of AML complianc

26

e frameworks for key sectors



27/27

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private coeach of which is a legally separate and independent entity. Please see www.deloitte.Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public andconnected network of member firms in more than 150 countries, Deloitte brings worldelivering the insights they need to address their most complex business challenges.committed to becoming the standard of excellence.


27

pany limited by guarantee, and its network of member firms, com/about for a detailed description of the legal structure of

rivate clients spanning multiple industries. With a globally -class capabilities and high-quality service to clients,

. Deloitte has in the region of 200,000 professionals, all

Financial Crimes Survey Presentation

Documents

Transcript of Financial Crimes Survey Presentation