CRIME REDUCTION INITIATIVES
telligence inherent in the benefits system makes it a particular target for internal fraudsters. The system is agency-specific and siloed, making it difficult to spot ir- regular behaviours. The Audit Commission also warns of an increase in recruitment fraud as more candidates give false infor- mation or withhold details in a bid to se- cure limited positions.
A new approach to fraud
Detecting fraud and investigating cases that have already been committed is a cost- ly and lengthy process, with low success rates. The process is heavily reliant on tip- offs from other employees and is not robust enough to tackle internal fraud at the root cause, especially as fraudsters continue to adapt and evolve tactics frequently.
The NFA says the public sector could save billions of pounds a year by taking a new approach to combating fraud. It recom- mends shifting emphasis away from in- vestigations, which have limited success in recouping lost money, to prevention in line with the private sector’s approach. The advice is based on an analysis of best prac- tices implementing and maintaining coun- ter-fraud measures both from the private sector as well as successful projects run by the Department of Work and Pensions and HM Revenue and Customers.
However, the move from reactive fixing to prevention requires a new approach to in- formation management powered by tech- nology. Combating internal fraud cannot be managed by the instinct and experience of fraud investigators alone. Technology is one piece of the puzzle but cultural changes are also needed to ensure data is seen as a valuable asset by employees – one worth using, protecting and investing in to deliver efficiencies and spending cuts.
Horizon shift
The National Fraud Authority moved from the Attorney General’s Office to the Home Office on 1 April 2011.
The Government said it showed that tackling fraud will be placed at the heart of the fight to cut economic crime.
Home Secretary Theresa May said: “Fraud can have devastating consequences and is often used to fund serious crimes, such as terrorism, drugs and human
trafficking at a cost to the UK of around £38bn a year.
“The Government is determined to give greater focus to tackling both serious and economic crime.”
The NFA will continue to work closely with the Cabinet Office on a programme to reduce levels of fraud across the public sector.
Minister for the Cabinet Office, Francis Maude, said: “By setting up our own Counter Fraud Champions
we have shown that we will not tolerate fraud. The latest National Fraud Authority estimate reveals £21bn of fraud against the public sector and contrary to what many people think, fraud and error is not just confined to benefits and revenue.
“It affects every government department and impacts on the Government’s ability to deliver better public services, while stripping the civil service of vital resources.
“The new network of Counter Fraud Champions, based in all major government departments, are helping strengthen the fight against the massive amount of fraud and error in the public sector and the Government’s Counter Fraud and Error Taskforce initiatives are already showing success in reducing fraud levels. I look forward to continuing to work with the National Fraud Authority to further strengthen our anti-fraud measures across Whitehall and the public sector.”
public sector executive Mar/Apr 11 | 43
This is a major challenge for a number of cultural reasons, including the lack of ownership of data, security and a lack of technology to enable effective informa- tion-sharing.
But the absence of knowledge-sharing is more damaging than any of the issues, real or imagined, it can bring. Information- sharing can help the public sector as a whole be more aware of known and sus- pected fraud, and build a better and more intelligent picture of typical and frequent attacks.
The NFA advises that there needs to be a fundamental change in the public sector’s approach to fraud, with data sharing as the default option, followed by ‘security by ex- ception’.
Approaches to combat fraud
The most effective way to combat inter- nal fraud is to use analytics to identify high probabilities of fraud based on a se- ries of patterns before any money is paid. Analytics would enable greater value to be extracted from information to identify the areas at greatest risk so that resources can be prioritised accordingly.
Analytics is not a new approach. The tech- nology has been used at an advanced level for years to combat fraud in the private
Cultural change
A growing public concern over citizen pri- vacy is creating increasing pressure not to share information internally. One of the main barriers is that many departments and agencies view information as a secu- rity risk, keeping it under lock and key and failing to transform it into the greatest as- set of all – knowledge.
sector, particularly in financial services. Although analytics is currently used in the public sector, techniques often operate in isolation and are designed to report on past incidents rather than actively identify and predict fraud.
A hybrid approach that combines tech- niques including rules-based detection, anomaly detection, advanced analytics and social network analysis would help govern- ment to reduce internal fraud. Combined, these techniques would ensure all types of fraud including known, unknown and complex scams, can be detected, predicted and prevented.
A fresh attitude to information manage- ment combined with the right technology will ultimately allow government to adopt methods already used by the private sector to gain a true networked view of internal fraud.
To succeed, the public sector must value and prioritise data to make smarter deci- sions about how to reduce the incidence of internal fraud.
(1)
www.attorneygeneral.gov.uk/nfa/WhatAreWeSaying/ Fraud in the public sector, PricewaterhouseCoopers, July
NewsRelease/Pages/
fraud-costs-the-UK-over-38billion.aspx (2)
2010
Graham Kemp is the head of public sector at business analytics company SAS UK.
He has over ten years of experience advising government on how to select and deploy effective technology so- lutions to make better, more informed deci- sions using their data.
Graham Kemp
FOR MORE INFORMATION Visit
www.sas.com/UK
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