14 Dec 2015
This week, Ernst & Young Fraud Investigation & Dispute Services (FIDS) announced their list of anticipated trends in fraud and corruption for 2016.
FIDS noted that anti-bribery/anti-corruption enforcement has increased on a global scale, with companies feeling additional pressure from geopolitical instability and persistent cyber attacks increasing their exposure to bribery, fraud, cyber breaches and terrorist financing. The higher risk that companies are facing is accompanied by increased constraints on their ability to invest in compliance functions.
In 2016, FIDS is advising companies to steer their energies towards proactive risk monitoring to fully cope with the following four major trends:
1. Cyber breach – hacktivists are expected to adopt recent destructive attack techniques in their ever more aggressive attempts to breach systems. This is bad news for more than a third of global organisations that, according to EY’s recent Global Information Security Survey, are not confident in their ability to detect sophisticated cyber attacks.
2. Individual accountability – a renewed focus on individual accountability is apparent, with the US Department of Justice’s Yates Memorandum requiring companies to identify all individuals complicit in corporate wrongdoing in order to be credited with cooperation with the authorities.
3. Data privacy and information sharing – with the European Court of Justice’s invalidation of the Safe Harbour Data Privacy regulation, and the anticipated signing into law of the Cybersecurity Information Sharing Act in the US, companies will need to grapple with new legislation concerning how personal information should be managed, shared and protected internationally.
4. Sanctions – companies constantly need to adapt to a demanding regulatory environment, with continued government-enforced trade sanctions against individuals, companies and other governments. Continued vigilance is required with third parties and individuals masked by corporate structures.
FIDS went on to suggest that the financial services industry focus on raised compliance expectations for broker-dealers and investment advisors, increased oversight into retail asset management and increased controls and protection for customer assets.
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