Fuelling the fight against fraud

Account Manager at BAE Systems Applied Intelligence Read time: 4 mins
Stuart Goodwin and Dil Begum consider the deep rooted issue of fraud in the UK and examine how better use of data may help turn the tide.
Fuelling the fight against fraud blog Let’s face it, we’re all likely to be a victim of crime at some point in our lives.
 
Us? We’ve both been robbed before – now that’s an experience we wouldn’t wish to repeat – but actually, it’s not the most common crime in the UK. Nor (thankfully) is anything laced with physical violence.
 
No, the UK’s most commonly experienced crime – less visible but nonetheless deeply invidious – is fraud. Don’t believe us? Well, you don’t need to take our word from it – it’s also the conclusion of the country’s National Crime Agency.
 

Casting a long shadow

 
The thing about fraud is that everyone is vulnerable. Its tentacles stretch across age groups, and it affects individuals and businesses large and small, as well as organisations across the public sector. 
 
More recent statistics are frustratingly hard to come by, but the 2017 Annual Fraud Indicator estimates fraud losses to the UK at around £190 billion every year, with the private sector hit hardest losing around £140 billion, the public sector more than £40 billion and individuals around £7 billion. And that’s even before the pandemic hit, with more than 6,000 cases of Covid-related fraud and cyber-crime recorded and £34.5m stolen since March 1, 2020 alone.
 
To tell you the truth, such data is pretty stark. Both of us have worked on fraud issues in the public sector over the years and to see it remain such a deep-rooted issue only inspires us to redouble our efforts to help government solve these complex and ever-evolving threats. 
 
Data, though, holds the key to the solution. It’s not just about the visibility of official statistics – we can’t be clear about what we’re fighting without understanding the scale of the opponent – but it’s also about combining it with the power of technology and analytics to help organisations be better placed to fight fraud in all its forms. 
 

An intelligent approach

 
A good example of this approach is BAE Systems’ very own Intelligence Network, a global community of like-minded cyber and financial crime professionals and industry influencers specifically set up to safeguard the digital world. We’ve identified four trends that enable cyber fraud and set up work streams to tackle each of them: 
 
•    Endemic attacks: the prevailing mindset in cyber security is that organisations should think about “when” not “if” they suffer a successful cyber attack. 
•    Operating in silos: there’s limited information sharing between security and fraud teams (and across functions and industries) and joint action is rare.
•    The cyber to fraud gap: cyber security, counter fraud and law enforcement all operate independently, with their own distinct objectives.
•    Social engineering: the ability of criminals to deceive people drives and sustains cyber attacks and fraud.
 

Taxing times 

 
Another example is the approach taken by HMRC, the UK’s tax, payments and customs authority. 

Using BAE Systems’ NetReveal® software, a set of compliance networks have been constructed, all of which are underpinned by a variety of different data sources.
 
This system, which is named Connect, aims to stop errors, non-compliance and tax fraud, and now contains more than a billion records, all of which are geared towards saving the British government much needed revenue. For example, the VAT (Value Added Tax) network helped HMRC identify a new and highly complex organised VAT fraud, and helped them protect hundreds of millions of pounds in the first 10 months of its operation. 
 
In 2014 we integrated new systems and updated data from new sources such as the land registry, and this upgrade enabled NetReveal® to risk assess all self-assessed and VAT returns which come into HMRC, which continues to support HMRC in saving about £1 billion a year in errors alone. Connect now has thousands of users and many more that deal with its outputs down the line and is a significant keystone in HMRC’s ability to tackle tax evasion and fraud.
 

Looking long-term

 
Unfortunately, fraud is such a systemic issue that examples such as HMRC’s Connect – while hugely valuable – do not represent a silver bullet. There will always be fraudsters out there probing for weaknesses, and this means that counter-fraud systems need to continue to evolve and update to enable organisations to keep pace with the criminals who are constantly developing their methods and approaches.
 
However, that doesn’t mean nothing can be done. As we’ve shown, organisations’ data represents a powerful tool in the armoury – it just needs to be continually used to help counter ever-changing threats. Do this and better results will follow. 

Learn more about BAE Systems’ NetReveal.
 
About the authors
 
Stuart Goodwin is a Social Networks Analyst and Fraud SME at BAE Systems Applied Intelligence
stuart.goodwin2@baesystems.com
 
Dil Begum is an Account Manager at BAE Systems Applied Intelligence
dil.begum@baesystems.com
 

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Stuart Goodwin, Social Networks Analyst and Fraud SME, & Dil Begum Account Manager at BAE Systems Applied Intelligence 20 April 2021