Graydon and Cifas, the UK fraud prevention service, announced recently they have completed data matching analysis to understand synergies between the Graydon cases of suspicious corporate activity and the Cifas national database of known fraud.
The results of the matching exercise demonstrated two key points:
- Fraudsters will target any high-value sectors with soft targets, the corporate world needs to boost information sharing if they are to tackle fraud head-on.
- Fraudulent behaviour by directors isn’t isolated to their work – supplementary data from public bodies and organisations enables earlier identification of behaviour and/or modus operandi.
There is a wealth of data not available in the public domain, which exists on the Cifas National Fraud Database – the only UK database detailing confirmed fraudulent activity.
Cifas members share information securely across 14 different sectors including banking, insurance, asset finance and telecommunications., so the information contained on the Cifas National Fraud Database details confirmed fraudulent activity across the UK economy.
The live database holds approximately 1,800,000 cases from the previous six years and requires all Cifas members to submit identified fraud behaviour within 24 hours following identification. It receives around 800 new reports every hour. All cases submitted to the Cifas database contain appropriate evidence to submit a formal report to the police, with sufficient grounds to press criminal charges. Members save a combined £1.4bn last year from using this information in their risk decisions.
The matching exercise showed a high correlation between suspected fraud activity identified by Graydon and confirmed fraudulent activity reported to Cifas specifically it identified the activity of the people behind the business with significant control:
Cases are being reported but more need to come forward: 43% of cases where Graydon had withdrawn a credit rating due to suspicious activity were matched with reports on the Cifas database
This is not isolated behaviour, 5.3 cases were returned for each company match, and 8.3 cases for each director matched on the national fraud database, on average.
Fraudsters hang out at the same old haunts. Suspected fraud on both databases had been carried out from the same address – 90% match rate in multiple cases at the same address.
The analysis indicated two areas of disproportionately high match rates – application fraud (21%) and misuse of facility (67%). Both these types of fraud were much higher in corporates than an average view of the National Fraud Database would normally expect.
The following definitions were used:
When an application for a product or service is made with ‘material falsehoods’, or by purposefully omitting important information. Cases such as these usually have false supporting documents or false employment or income details, concealed addresses or concealed adverse credit history.
The most common reason for filing a case of Application Fraud was ‘Undisclosed Adverse Address History’. In the data matching exercise, there was a 90% match-rate on multiple cases of fraud being carried out from the same addresses.
Misuse of Facility
The misuse of an account, policy or product; for example paying in an altered cheque to an individual or commercial current account, or taking the facility with no attention to pay it back.
The most common reason for filing a case of Misuse of Facility was ‘the paying in of false instruments, wrongfully retained credit and multiple encashment fraud’. Typically, these three reasons for filing are symptomatic of money laundering.
The prevalence of these two types of fraud demonstrates the significant value of Cifas data to B2B businesses fighting commercial fraud and is indicative of how corporate entities are increasingly attractive to individuals committing these types of fraud as they provide effective vehicles to hide behind.
Graydon is a B2B credit reference agency with a long-standing expertise in helping business manage their commercial risk and avoid corporate fraud. Models of suspicious corporate activity have been developed over the years, based on the filing behaviours of fraudulent businesses and information supplied by users. These models are used to generate alerts to Graydon users or suspend the credit ratings of suspect businesses.
Chris Oatts, Operations Director, Graydon UK: “Matching the suspected frauds identified by Graydon against the confirmed fraud on Cifas’ National Fraud Database has once again demonstrated Graydon’s capability to spot potential frauds. There is a strong overlap between fraudulent businesses and the individuals behind them, and as a result, it demonstrates that businesses cannot afford to take shortcuts in their due diligence process or they will be stung. This study absolutely shows the benefits of organisations sharing their data in the fight against fraud.”
Lee D’Arcy, Commercial Director, Cifas: “Many of our members often see fraudulent behaviour from small businesses and sole traders and the cases they file give us a great deal of insight into the people behind them. Our mission to prevent fraud isn’t limited to consumer activities and working in this space with Graydon offers a wider opportunity to highlight the offenders, share information and work to stop fraud that costs UK businesses billions of pounds a year.
Cifas exists to prevent fraud and financial crime, and is an independent, not-for-profit membership organisation that protects businesses and individuals through effective and secure data and intelligence sharing between the private, public and third sectors. In 2018, Cifas member organisations prevented over £1.3 billion of fraud losses.
Cifas data is included in the ONS Crime Statistics of police recorded crime and works alongside law enforcement agencies in tackling fraud. Cifas also offers Protective Registration for individuals whose identities are at risk of being used fraudulently, for instance after a burglary. Cifas also runs a scheme called Protecting the Vulnerable, offered free of charge to local authorities to protect those under the care of Court Deputies who are unable to access financial products and whose identities may be at risk.
With more than 130 years of experience, Graydon is a leading provider of business information, analytics and insights. Graydon helps its customers to make fast, accurate decisions, enabling them to minimise risk, identify fraud as well as optimise opportunities with their commercial relationships. To do so, Graydon uses more than 130 international databases and the information of more than 90 million companies. Graydon has offices in London, Cardiff, Amsterdam and Antwerp. Since 2016 Graydon has been part of Atradius, one of the world’s largest credit insurance companies.
Source: Graydon Press Release