Technologies like online banking and mobile banking are fuelling the rise in economic crime in SA.
So says Terrance Booysen, CEO of the CGF Research Institute, who notes economic crime - particularly fraud and corruption - is causing organisations in both the public and private sector substantial financial losses.
The SA Banking Risk Information Centre notes online banking fraud accounted for almost half of all credit card fraud cases last year. It adds the banking industry's gross fraud losses due to South African-issued credit card fraud increased by 23% from R366 million in 2013 to R453.9 million in 2014, largely due to criminals' misuse of online application channels.
In the latest Global Economic Crime Survey concluded by PricewaterhouseCoopers, the top most reported crimes were asset misappropriation, followed by procurement fraud, and bribery and corruption, Booysen notes.
"What is of grave concern for South Africa is that the country is reportedly experiencing a higher incidence of economic crime in every category, except in the categories of intellectual property infringement and mortgage fraud."
He notes surveillance software like keyloggers is also assisting cyber criminals to fuel economic crime in SA.
"A keylogger is a type of surveillance software that has the capability to record every keystroke you make to a log file, usually encrypted. A keylogger recorder can record instant messages, e-mail, and any information you type at any time using your keyboard. The log file created by the keylogger can then be sent to a specified receiver. Some keylogger programs will also record any e-mail addresses you use and Web site URLs you visit," he explains.
More concerning is that forensic investigators estimate that 62% of all fraud and corruption is committed internally by the organisation's employees, Booysen reveals.
"This may be largely due to the fact that many organisations lack proper and effective internal controls to detect and prevent fraud, and organisations should be more proactive by implementing effective systems of internal controls that are designed to assist in the prevention of economic crime within an organisation."
He adds not only should the system of internal controls be clearly articulated into the organisation's corporate governance framework and risk matrices, but clear lines of accountability must be attributed to the board of directors when such controls fail, or worse, when these controls are missing.
"An organisation should be able to quickly detect when its internal controls are inadequate, and furthermore it should also know when there is any form of breaches of the controls, or a lack of management review and so forth."
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