59% of Indian organisations faced financial or economic fraud in the past 24 months: PwC survey

• Procurement fraud is now the biggest problem for 50% of Indian businesses – a 21% increase from the global perspective.
• Corruption and bribery constitute 33% of economic crimes, however, 34% of companies did not conduct relevant audits on third-party vendors.
• While 52% of business leaders are confident in their third-party risk management, 13% have no such programme in place.
• Only 37% of companies in India utilise real-time data analytics to prevent fraudulent transactions.

Mumbai: According to PwC’s ‘Global Economic Crime Survey 2024 – India outlook’, released today, 59% of the Indian organisations surveyed said that they had faced financial or economic fraud in the past 24 months. This is 18% higher than the global average of 41% and 7% higher in India when compared to the results of the 2022 edition of the same survey.

The 2024 edition of the survey indicates that procurement fraud is now a predominant issue for Indian businesses, with 50% of respondents identifying it as a major problem, marking a significant 21% increase compared to the global sentiment. In contrast, in 2022, customer fraud was reported as the top concern by 47% of businesses. Meanwhile, globally, 44% of leaders’ highlight cybercrime as their top concern.

Puneet Garkhel, Partner and Leader, Forensic Services, PwC India, commented, ’In our 2022 survey, customer fraud led the list, reported by 47% of companies. However, this year's findings reveal a shift with procurement fraud now emerging as the primary concern. Historically, one of the oldest economic crimes, procurement fraud involves illegal manipulation of procurement processes for financial gain. This year, half of our respondents in India identified it as their major worry. Being one of the most disruptive economic crimes, procurement fraud cuts across industries and processes. Therefore, maintaining the integrity of the procurement process is of paramount importance as the reputation of a company rests on it.’
 

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While Indian companies are using data analytics to combat procurement fraud with 52% analysing transactions pre-deal and 46% post-deal, only 37% employ real-time payment monitoring with the capacity to block suspicious transactions. The survey suggests effective fraud prevention strategies including strengthening processes, revising vendor selection, enforcing conflict of interest policies, and training the staff. However, only 44% of Indian respondents utilise data analytics to spot unusual bid patterns.

The survey also revealed that about 33% of all economic crimes are related to corruption and bribery, while 26% of the respondents in India found it to be one of the top three disruptive economic crimes in the past 24 months. About 82% of respondents in India said that they were confident or very confident about their company’s compliance programmes’ ability to mitigate corruption risks. On the global front, 77% business leaders said that they were confident or very confident about their company’s efforts in this regard. About 20% of company leaders in India believed corrupt practices, i.e. those associated with corrupt or improper payments to government officials and/or commercial customers, had increased in the past 12 months, while 34% said that corruption had decreased.

Despite corruption and bribery being a concern, 34% of companies did not conduct anti-corruption/anti-bribery audits of third-party vendors, 24% said that they had not done so in the past two years and 10% said they had never conducted such an audit. Also, in India, 46% said that for instances of corruption, their organisation always or very often conducted a root cause analysis.

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The survey also pointed out that 52% of Indian business leaders are confident and 26% are very confident, in their companies' grasp of third-party interactions. However, 13% did not even have a third-party risk management programme. About 62% of companies surveyed in India said that they had conducted an enterprise-wide fraud risk assessment in the past 12 months. Another 15% were planning such an exercise in the next 12 months. Third-party risk management programmes, including risk-scoring of third parties, were marginally higher in India at 56% than the global level of 54%.

PwC's survey reveals a pressing concern over forced labour across industries — from manufacturing to fashion and from agriculture to hospitality. In India, 16% of companies are actively addressing this risk while 24% evaluating it, 26% are unaware of its importance within their organisation and 19% recognise it but lack assessment plans. Non-compliance could result in harsh penalties, market restrictions and product bans.

The survey highlighted key strategies for tackling economic fraud and financial crimes, including conducting internal investigations to identify corruption, enhancing data-driven investigative functions, and managing third-party risks through on-site assessments and transaction reviews. Regular fraud risk assessments and refined vendor risk scoring are essential. Companies must also address forced labour and fulfil ESG responsibilities, with senior executives and boards staying informed about the risk indicators and ensuring compliance with sanctions.

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