Weak ID checks lead to £1.5bn lost to benefit fraud – Comment from AML specialists SmartSearch

22 May 2020

It has been reported that up to £1.5bn may have been lost to fraudulent benefit claims in recent weeks, due to processes being relaxed to deal with the volume of new applicants. This includes failing to carry out proper ID checks of the sort that financial services firms and others are required by law to make. (https://www.bbc.co.uk/news/business-52745983)

John Dobson, CEO of leading anti-money laundering specialists SmartSearch, commented on the reports: “Government offices are dealing with public funds and it is wholly negligent not to perform proper ID checks. It is a fundamental duty of government to protect public money and on this evidence they are falling down on the job.

“They have access to a wide range of official data sources that are not available to the private sector. Yet businesses are expected to implement a complex set of money laundering regulations and face stiff fines for any breaches.

“If a private firm lost even a small fraction of the £1.5bn these reports claim has been paid out in fraudulent benefit claims, it would quite rightly be hauled over the coals by regulators, not to mention shareholders.

“There is no excuse for not running robust ID checks. These can be automated so that 95 per cent of cases can be dealt with and a positive ID match made very quickly – so it would not delay payments in the vast majority of cases. This leaves more resource available so that the remaining 5 per cent of cases where there are discrepancies can be followed up more thoroughly. It is here that the bulk of the fraudulent activity will be focused.”