During the last five years, an average of 31.1 percent of respondents to annual Deloitte polls claimed their organizations experienced a supply chain financial crime (fraud, waste or abuse) in the preceding year. However, in a 2018 poll, only 15.1 percent of respondents said their organizations were using or piloting blockchain technology to help mitigate financial crime risks in their supply chains.
"Financial crimes in supply chains are more complex than ever, but some leading edge organizations are leveraging emerging technologies to help combat it," says Larry Kivett, a Deloitte Risk and Financial Advisory partner in forensic practice, Deloitte Financial Advisory Services LLP. "Enhanced transactional transparency and visibility along the chain of custody are pushing organizations to look to blockchain to help prevent and detect supply chain fraud, waste and abuse through third-party relationship management and transaction execution. Layered with advanced analytics, blockchain can offer supply chain managers a path to digitizing prevention and detection of financial crime."
Groups reporting higher than average rates of crime in 2018 were energy, resources and industrials (38.6 percent); consumer (37.1 percent); technology, media and telecommunications (34.2 percent) and life sciences and health care (33.5 percent).
"We're seeing a growing awareness among executives that blockchain could be worth exploring as it can offer a new way to mitigate the possibility of supply chain fraud, waste and abuse," says Mike Prokop, a Deloitte Risk and Financial Advisory managing director in regulatory and operational risk management, Deloitte & Touche LLP. "While the technology's application for financial crime management in supply chains is nascent, early adopters could glean interesting competitive advantage by leveraging blockchain's inherent anti-fraud functionality."
Additionally, the 2018 poll found that more than one-quarter of the respondents agreed that data encryption and information security resulting from a blockchain solution stood to improve their organizations' supply chain financial crime risk management efforts the most. Meanwhile, others said blockchain's creation of an immutable register, proof of identity and anti-money laundering safeguards were helpful for anti-fraud efforts in supply chains.