New survey findings from Thomson Reuters has revealed the far-reaching impacts of financial crime, the funds of which can be used to bankroll terrorism, slavery, child labour as well as environmental crime.
In order to incorporate these consequences, the survey report noted it had expanded its scope of what was considered ‘financial crime’ to include bribery, corruption, money laundering, fraud, theft, cyber crime, slave labour and human trafficking.
Of the 2,373 survey respondents comprised of C-suite or senior management level organisation executives across 19 countries, nearly half (47 per cent) said their companies had been a victim of financial crime in the 12 months leading up to the survey.
Furthermore, of 4,018 Asia-Pacific companies analysed by Thomson Reuters with a combined turnover of US$5.2 trillion, the amount lost to financial crime was estimated to be US$166 billion – funds which could have been put into areas such as education, the report pointed out.
“In Spain, [$1 billion] could pay for high quality early years education for 150,000 toddlers, whilst 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.
“These examples just begin to illustrate the real-life consequences and impact on individual lives as a direct result of every dollar of revenue lost to financial crime,” the report said.
Thomson Reuters head of risk and RegTech for Asia Pacific Julia Walker said financial institutions were "carrying the financial burden" in spending billions to thwart money laundering and illicit activities.
"Year on year they are seeing greater amounts disappear from their business as result," Ms Walker said.
"Financial crime is not a faceless crime, the most vulnerable in our society are preyed on and exploited by organised crime for profit."
Companies were also failing to adhere with compliance procedures, such as screening and classifying risk, conducting due diligence, monitoring, delivering workflow and process reports, and training and education.
In the Asia-Pacific region, only 50 per cent of companies were producing reports or engaging in adequate training or education of their stakeholders (51 per cent).
“Gaps in formal compliance procedures and inadequate training on important issues like slave labour and human trafficking are evident,” the report said. “The result is that such crime continues to flourish.
“Access to reliable, quality data and actionable intelligence, as well as industry-wide collaboration, lie at the heart of any future solution to a plethora of issues that continue to cause incalculable harm to industry, society and the millions of individuals across the globe who collectively shoulder the true cost of financial crime.”
