Most organisations have recognised the advantages of digitalization as a means of cost-saving, expanding worldwide communication, and boosting employee happiness. The Covid-19 pandemic has accelerated the rate at which digital techniques are moving into the mainstream.
However, these positives should not mask the increased risk from fraudsters and money launderers, who are also using digital technologies to develop complex programmes that make them even harder to track down.
As cybercrime prevention moves to the top of the agenda for government and business leaders, new digital security measures and cybercrime policies are further complicating an already complex area.
Chartered accountants will be crucial to safeguarding businesses, indentifying risks, and navigating the red tape in this ever-changing landscape.
A series of high-profile ransomware attacks over the past few years have been driving the cybercrime agenda. As reliance on digital technology skyrockets, the number of attacks has increased by 32 percent globally and 178 percent in the UAE in Q2 2022.
While this form of cybercrime is accumulating column inches, a deeper dive into the digital world reveals a hotbed of criminal activity, including money laundering and terrorism financing.
With the value of money-laundering reportedly reaching 5 percent of the global GDP or $800 billion to $2 trillion annually, increased digitalisation and use of crypto-assets are expected to only further fuel the funding of criminal activity. This has led international bodies like the Financial Action Task Force (FATF) and World Bank to weigh in with guidance on mitigating the risks posed by digital currency transactions.
In its bid to become a global business hub, the UAE has been one of the most progressive countries in liberalising cypto-asset use and digitalising its financial sector. However, in doing so, the nation has been left exposed to criminal exploitation of blockchain technology, which has become a tool for money launderering, and other financial crime.
Having recently been moved to the FATF’s grey list, the UAE government has been quick to renew its anti-money laundering vow, introducing international cyber security standards to protect the business environment and economy from financial crime, and improve investor confidence. This includes the recent issuance of new anti-money laundering guidelines by the Central Bank of UAE, obligating financial institues to conduct regular risk assesments of its services and exposures.
This new measure follows the adoption of the Federal Decree Law on Combatting Cybercrimes, and the recent formation of the Dubai Virtual Assets Regulatory Authority to oversee the creation of a regulated onshore industry for virtual assets in the emirate. However, equally as important in thwarting criminals is proactive business practice and compliance – a role that chartered accountants are well placed to support and lead.
Accountancy has always been the profession at the heart of indentifying, assuring and safeguarding businesses from financial crime and fraud. As a professional members group designed to uphold the highest international standards in assurance and auditing, chartered accountants will be able to play an instrumental role in protecting the business environment and supporting companies with the new international regulatory standards introduced by the UAE government.
Chartered accountants can help businesses with:
- Evaluating frameworks and risks: Chartered accountants help evaluate and assess protections across the whole business. They ensure the frameworks put in place are optimised to help organisations decide which risks they are willing to accept and which ones fall outside their risk appetite.
- Challenging the traditional control environment and preparing for change: Chartered accountants question the efficacy of conventional control frameworks and environments. More controls don’t always mean better protection from financial crime. Identifying these ineffective controls helps professionals think more creatively and actively develop solutions that meet regulatory requirements and support their customers.
- Being continuously proactive: Chartered accountants reinforce professional scepticism and embed fraud-related learnings across the firm. They do not rely on just regulatory requirements and attention from regulators; instead, they use external data and information to widen the scope of the risk assessment, anticipate risks, and urge businesses to build protections into the design of core practices.
Stamping out money laundering and the financing of terrorism will impact the capabilities of criminal actors, and act as a deterrent against criminal activity as a whole. To achieve this, governments, businesses and accountants need to work closely together to form a proactive, robust defence.
The key to minimising financial crime in the region and around the world will be to make use of the skills of chartered accountants to spot irregularities in financial data, create assurance frameworks, and offer policy and regulation consultation.
