Identity fraud is on the rise, but financial institutions are fighting back with a joint initiative designed to highlight the problem and improve staff training. Michael Imeson reports.
An online training aid to help financial institutions and other organisations to protect themselves against identity fraudsters has just been launched. The site – www.idfraudpreventiontraining.com – is a joint initiative between banking associations and other bodies. It is aimed at managers of organisations that are vulnerable to fraudsters and is designed to train staff to spot and stop criminals using stolen or fictitious identities.
Identity fraud covers two types of crime: creating and using the identity of a fictitious person; and copying the identity of a living or deceased person (sometimes called impersonation fraud). Identity fraud is a growing problem in the UK and other parts of the world, and financial organisations are teaming up to devise solutions. It is not a major threat in the EU because most countries have compulsory identity cards.
UK is a target
“The UK has the worst record in Europe,” says Peter Hurst, chief executive of Cifas, the fraud prevention service funded by the financial services industry and one of the organisations behind the new website. “I was at a meeting recently and a European Commission official described Britain as the country of choice in Europe for organised crime.”
Crimes facilitated by identity fraud amount to more than £1.3bn a year in the UK. “Reported identity fraud grew by 20% and impersonation fraud by 17% in 2004,” says Mr Hurst.
The combined total of identity and impersonation fraud cases grew to 120,000 in 2004, up from 100,000 in 2003 and 20,000 in 1999. “It remains one of the most rapidly growing fraud types, accounting for 27% of all fraud last year,” says Mr Hurst. “A rising tide of fraudulent activity is hitting our financial services industry. But they deserve some credit for the work they do to prevent the majority of it.”
Other organisations behind the new e-learning tool are Apacs (the payments association), the British Bankers’ Association and the Home Office’s Identity Fraud Steering Committee.
Preventative action
The training portal gives information and guidance on what identity fraud is and how to prevent it. There is an interactive section designed to improve the awareness of employees who need to check the identity of new and existing customers every day. It highlights security features on key documents, such as passports and driving licences; provides updates on counterfeiting, stolen ID documents, statistics and regulatory developments; and includes links to verify identity documents from other countries.
Other schemes modelled on Cifas have been set up in South Africa and Ireland. The South African Fraud Prevention Service (SAFPS) reported last month that identity theft and impersonation crime rose 15% in the 12 months to April 2005. There were 1953 cases valued at R6.7m ($1m).
East African initiative
SAFPS has also been instrumental in the recent formation of the Fraud Prevention Service East Africa (FPSEA), which will be providing a similar service to banks and financial institutions in Kenya, Uganda and Tanzania.
Pat Cunningham, executive director of SAFPS, says: “The FPSEA will be using our fraud data management system in East Africa and we will be developing a close working relationship with them in the roll out of their service.
“We are also currently in negotiations with organisations in Ghana, Nigeria, the Middle East and Brazil, which have seen our data management system and have expressed interest in applying it in these countries.”
Lack of data
The US has one of the worst records on identity fraud. “The situation is utterly appalling,” says Mr Hurst. “We think there are several million cases a year, but there is no single organisation to pull all the figures together and co-ordinate attempts to combat the problem.”
In the EU, by contrast, it is less of an issue. Besides the region’s long-standing tradition of identity cards, in much of Europe financial services transactions are more likely to be conducted face-to-face in branches, which deters criminals. In the UK and US, postal, telephone and internet delivery channels are more widely used, which criminals favour.
Nonetheless, this type of fraud does exist and work is being done by the European Commission in Brussels to raise awareness of the issue. “The Dutch police, for example, accept there is a problem,” says Mr Hurst. “But in Germany and Belgium, it doesn’t even get on their radar.”
