Leveraging technology to prevent fraud as the Government's 'Stop! Think Fraud' campaign launches
By Barley Laing, the UK Managing Director at Melissa
According to the Office of National Statistics there were an estimated 3.5 million fraud offences last year, with it accounting for around 40 per cent of all crime in England and Wales.
It is why the launch of the Government’s ‘Stop! Think Fraud’ campaign, which is educating consumers on how to look out for and avoid fraud, is a good move. But what should organisations be doing to prevent fraud, and what role can technology play in this process? This is important with fraud costing British businesses an estimated £158 billion in 2021.
Technology is playing a pivotal role in aiding ID verification and countering the threat of fraud, as well as helping businesses adhere to know your customer (KYC), know your business (KYB) and anti-money laundering (AML) regulations.
Use an eIDV tool
Technology has come of age with electronic identity verification (eIDV) platforms leading the way. Such tools can be accessed via a number of delivery mechanisms, including cloud API (application programming interface) and SaaS (software-as-a-service), and scaled up or down according to the users’ needs.
With these platforms being “always on” they are able, in real-time, to cross-check the names, addresses, email addresses and phone numbers provided by applicants during remote onboarding. As well as preventing fraud this provides a good experience for the end user. For the best results, it’s recommended to obtain 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.
Using such a platform is significantly quicker, more accurate and cost effective for undertaking ID verification and preventing fraud, than manual checks. Also, this technology requires no additional staffing or training costs, and there is no risk of human error.
Utilise data cleaning technology
It is always best to have clean and up-to-date customer data. This makes it vital to use technology that delivers data hygiene, such as an address lookup or autocomplete service, which gathers accurate address data in real-time at the onboarding stage. These tools support ID verification, by delivering address verification. They also pick up any inaccuracies in customer contact data that’s vital in reducing the possibility of fraud from poor quality or inaccurate data.
Think KYB
The eIDV verification platform sourced should additionally offer global data for know your business (KYB) checks. By understanding the risks posed by new and existing business users and suppliers it’s possible to prevent fraud from taking place. KYB checks are crucial because fraud is frequently committed by shell companies or organisational structures that aren’t real. Screening in this way hinders crimes, such as money laundering and terror financing, which can cause substantial reputational damage.
Source a full service ID verification tool
Select ID verification technology that’s also capable of providing sanctions, politically exposed person (PEP) and relatives and close associate (RCA) screening, along with adverse media checks to prevent fraud. This provides a full service ID verification offering – one that offers economies of scale, and global coverage should that be required.
Sanctions data
Having access to an up-to-date sanctions list to ensure that you are up to speed with the latest sanctions data and regulations is essential to avoid fraud - something which is also a legal requirement. It’s advisable to use an automated eIDV platform that collects and synthesises sanctions data from trusted sources, globally, 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 undertake sanctions screening.
Remember PEPs and RCAs
For a broader best practice approach to sanctions screening it’s vital to obtain politically exposed person (PEP) and relatives and close associate (RCA) data to protect your organisation against potential fraud. These people 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. If they abuse their position to defraud your organisation, not only will there be a monetary cost, but the situation could cause substantial reputational damage.
Adverse media checks
Adverse media checks are a critical part of customer due diligence (CDD) and AML processes. Organisations using the automated technology that powers it are able to remain 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 could be PEPs and RCAs, along with others who might have possible negative regulatory, financial or reputational consequences to your organisation.
It's vital to obtain the most accurate risk profiles of those using your services by scanning for negative news on an individual or business, even if they do not appear on any international watchlists. Doing so supports best practice due diligence for KYC, KYB, and AML.
In summary
With the Government encouraging consumers to do their bit to protect themselves from becoming victims of fraud, organisations should be taking similar steps to do the same. This means obtaining a full service eIDV platform with a global reach - technology that delivers seamless, real-time ID checks. This not only prevents fraud but provides a smooth onboarding experience. The days of implementing costly manual checks using fragmented datasets from various sources that lack worldwide coverage need to be consigned to the past.
Authors
Barley Laing
As Managing Director, with 26 years of technology and data industry experience, his role is focused on meeting the data quality and ID/compliance needs for organisations in the UK and worldwide.