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Addressing identity-related fraud in the retail financial services ...
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Short Description: On-line Banking Fraud. Identity fraud also arises in connection with eCommerce activities of financial. institutions. Attempts have been made to deceive ...
Content Inside: IIR Conferences Retail Financial Services Forum Sydney 9 October 2003 12.00-12.30pm `Addressing Identity-related Fraud in the Retail Financial Services Sector' Russell G. Smith Australian Institute of Criminology Introduction In the twenty-first century, criminal misuse of identity lies at the heart of most fraud affecting financial services organisations, whether it involves opening credit card accounts in false names, providing misleading information as to credit-worthiness, transferring funds or using stolen cards without authorisation. Card-not-present transactions such as those that take place by telephone or on-line also create opportunities for identity fraud unless adequate verification of the identity of the card holder can take place. Finally, counterfeiting and altering plastic cards is one of the mainstays of identity fraudsters. This paper examines the problem of identity fraud as it relates to the retail financial services sector. After considering some of the key risk areas, evidence is provided of the extent of the problem and how the criminal justice system is dealing with it. The paper concludes with an examination of how the points-based system of identification can be improved and what weaknesses certain technological solutions ha ve for controlling identity-related fraud. Identifying Key Risk Areas in the Delivery of Financial Services The methods used to perpetrate identity-related fraud are many and varied, although they can be grouped into two main categories: creating an entirely fictitious identity, or making use of someone else's identity without their knowledge or permission. The motivation in each case is to obtain a financial gain or other benefit or to avoid a liability and then be unable to be located by police or creditors. This usually also involves opening and using bank accounts in false names so that stolen funds can be deposited and withdrawn anonymously. Opening Accounts in False Names The first contact that financial institutions will usually have with an identity fraudster will be when false evidence of identity is tendered when an account is opened. Often this will be a driver's licence or birth certificate. In recent trials conducted in New South Wales and Victoria it was found that 13% and 18%, respectively of birth certificates used to open accounts with a bank did not correspond with the data held by the Offices of Births Deaths and Marriages in each state.
