industry news SME profile Wednesday 07 Feb 2024 @ 17:55 How to tackle fraud in a globalised world




Public sector organisations are having to review and verify a greater range of identity documentation as part of the application process for services than they traditionally did, due to growth in migration rates in an increasingly globalised world.

The UK has been experiencing an upsurge in immigration in recent years, with 1.2 million people migrating to the UK in the twelve months up to June 2023 according to the Office for National Statistics (ONS). In 2019 the figure was 592,000.

Migration has also grown globally. According to the Organisation for Economic Co-operation and Development (OECD), there was a 14-percent increase in migrants to their member countries in 2022, compared with pre-pandemic 2019.

This increase is due to various factors, including people leaving their countries for a better life and more opportunities, along with “digital nomads” taking advantage of remote work policies and improving high-speed internet access to toil away while travelling the world.

In the meantime, fraud remains obstinately high with The Cabinet Office estimating that fraud and error costs the public purse up to £51.8 billion every year.

Obtain an eIDV platform

Using an electronic identity verification (eIDV) platform is the way forward to undertake ID verification, with the plethora of identity documents to review from around the word and levels of fraud remaining stubbornly high. These tools can be accessed via any delivery mechanism—cloud, API (application programming interface) and SaaS (software as a service)—and scaled up or down according to the users’ needs.

Due to these platforms being “always on” they can, in real-time, cross-check the names, addresses, email addresses and phone numbers provided by applicants during remote onboarding. This provides a good experience, while preventing fraud. For the best outcome, it’s recommended to source an eIDV tool with access to billions of consumer and business records from reputable sources around the world, such as government, utility and credit agencies.

When compared to manual checks, using such a platform is significantly quicker, more accurate and cost effective for undertaking ID verification and preventing fraud. This technology requires no additional staffing or training costs, and there’s no risk of human error.

First stage: Clean data

Before using an eIDV platform it’s advisable to have clean and up-to-date customer data. By, for example, matching a name to the right address you have confidence in the accuracy of your data and that your claimants are who they say they are. Putting processes in place that deliver ongoing data hygiene, such as an address lookup and autocomplete service, and gathering accurate address data in real-time at the onboarding stage is vital. These tools support ID verification, by delivering address validation. It’s also important to note that data quality and cleaning services that pick up any inaccuracies in customer contact data are more cost effective than using eIDV to undertake the same role.

Full service ID verification

The ID verification platform sourced should offer global data on know your business (KYB), sanctions, politically exposed persons (PEPs) and relatives and close associates (RCAs), along with adverse media screening. Such a tool provides a full service ID verification approach, along with economies of scale.

KYB checks are crucial

KYB screening is critical to fully understand the risks posed by new and existing business users and suppliers, and therefore helps to prevent fraud from taking place. It’s important because fraud is frequently committed by shell companies or organisational structures that aren’t real. Additionally, KYB checks hinder crimes, such as money laundering and terror financing, which can cause substantial reputational damage.

Integrated sanctions data

Having access to an up-to-date sanctions list is key to ensure that you are up to speed with the latest sanctions data and regulations. It’s also a legal requirement.

It’s preferable to use an automated eIDV platform that collects and synthesises sanctions data from a wide range of trusted sources worldwide, and is able to continually scan for updates on sanctions data and deliver them daily, in real-time. This automated approach is a much more efficient and accurate way to deliver sanctions screening

Check for PEPs and RCAs

For a broader best practice approach to sanctions screening—to protect your organisation against potential fraud and avoid having users that can damage your reputation—it’s vital to obtain PEP and RCA data from around the world. Both of these groups are more likely to be involved with or drawn into crime because of the nature of their roles or relationships with those in positions of power. Understanding who these people are is important, because if they abuse their positions to defraud your organisation, not only will there be monetary costs, but the situation could cause significant reputational damage.

Automated adverse media screening

Adverse media checks are a vital part of best practice citizen due diligence (CDD) and anti-money-laundering (AML) processes. The automated technology that powers it enables public bodies to keep up to date on the latest worldwide news and alerts in real-time on any arrests, court cases or convictions against users of their services. These may be PEPs and RCAs, along with others who might have possible negative regulatory, financial or reputational consequences to their organisation.

Scanning for negative news on an individual or business, even if they do not appear on any international watchlists, is essential to obtain the most accurate risk profiles of those using your services. It also supports best practice due diligence for know your citizen (KYC), KYB and AML.

Conclusion

The growth in migration in an increasingly globalised world requires public sector organisations to review and verify a wide range of ID documentation. Undertaking seamless, real-time ID checks via a full service eIDV platform with a global reach is the answer to prevent fraud and provide a smooth onboarding experience. The alternative—carrying out costly manual checks using fragmented datasets from numerous of different sources lacking worldwide coverage—is no longer fit for purpose to stop the scourge of fraud.

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