The impact of sophisticated crime on accountancy

If you thought the effects of technology were all positive, then think again! 

Although tech developments have been, and continue to be, critical to the development and betterment of industry, and life in general, there is also a negative impact. We are talking about how relatively easy it has become for criminals to move money around the world and for companies and individuals to avoid tax payments. 

Obviously, nobody can estimate anywhere near accurately the cost to the global economy of financial crime. Such crimes are notoriously difficult to pin down since they can cover everything from bribery and fraud to cybercrime, slavery, prostitution and human trafficking. However, some estimates say that financial crime costs $3.5 trillion a year.  

Types of economic crimes

Financial crime normally covers the following: 

Fraud 

Electronic crime 

Money laundering 

Terrorist financing 

Bribery and corruption 

Market abuse and insider dealing 

Information security 

Digitalisation has massively increased opportunities for criminals and created myriad risks for companies:  

• Where criminals would largely operate in a single state or country, they are now able to hack globally 
• Cryptocurrencies with their store of value can be transmitted anonymously and rapidly from one owner to another 
• Although laws operate on a country-by-country basis, criminals don’t have to. Basically, if you have Internet access, you can be a threat 

The result of all this digitalisation is to increase challenges – but also opportunities – for accountants and tax advisers. They need to not only stay abreast of events but be able to deal with increasingly complex financial systems on the one hand, but also are able to specialize and create new career paths. 

Fighting financial crime

Technology is helping the fight against financial crimes. Artificial intelligence, for instance, helps in assessing risk in the banking sector, identifying unusual activity, and money laundering and sanctions avoidance in particular.  

This area of financial crimes is normally one where forensic accountants become involved. 

As the Institute Of Chartered Accountants In England And Wales states on its website: 

Forensic accountants use their expertise in finance to investigate fraud and other financial misrepresentation. They work analysing financial information to enable lawyers to prosecute criminals, such as those funding illegal activities, and with insurance companies and other clients to resolve disputes.  

Forensic accountants are trained to look beyond the numbers and deal with the business realities of situations. This enables them to identify criminal activities, such as money laundering activities and the illegal sale of arms. 

Analysis, interpretation, summarisation and the presentation of complex financial and business related issues are prominent features of the profession. 

A forensic accountant will be familiar with legal concepts and procedures, and must be able to communicate financial information clearly and concisely in the courtroom.