Fraud During the Pandemic: Lessons Learned and the Impact Going Forward

Jessica Kimbell, GovNet
April 21, 2023

We recently hosted Counter Fraud 2023. Here’s a summary of what we learned.

The pandemic has caused unprecedented societal challenges, including a surge in fraudulent activities. Fraudsters have taken advantage of the opportunities presented by the pandemic, particularly in sectors with large sums of money, such as the oil and gas industry and those involved in COVID-19 relief efforts. 

The risk of fraud is higher than ever, and it's essential to take steps to prevent and address fraudulent activities. 

In this blog post, we'll explore the most significant lessons learned in public sector fraud during the pandemic and discuss how we can use this period to strengthen ourselves in the fight against fraud.

The Biggest Lessons Learned in Public Sector Fraud

During the pandemic, it became evident that organised criminals would take any opportunity to attack any system that pays out money. The public sector had to adapt quickly to prevent and address fraudulent activities. 

Prevention is Key

The pandemic has highlighted the importance of preventing fraud rather than trying to recover the funds once it's occurred. 

Organisations must proactively prevent fraud by implementing robust internal processes, introducing effective legislation and using data and analytics to identify and mitigate risks. By doing so, organisations can reduce their vulnerability to fraudsters and prevent them from exploiting the system.

Collaborating with partners nationally and internationally will help to prevent fraud effectively. It requires sharing information and best practices in fraud prevention and adopting a cross-system perspective that brings fraud expertise in. 

By working together, organisations can develop a comprehensive approach to fraud prevention that considers all possible risks and ensures a coordinated response.

Additionally, it's essential to ensure consequences for individuals committing fraud. This includes prosecuting those who commit fraud and imposing appropriate sanctions to deter others from engaging in fraudulent activities. 

It's also important to target the fraud enablers, such as money launderers and those facilitating the movement of funds obtained through fraud.


We Can’t Rely on a Single Silver Bullet

One of the most significant takeaways from the pandemic regarding fraud prevention is that relying on a single solution or approach is ineffective in combating fraudulent activities. 

While criminal justice sanctions play a vital role in deterring fraudsters, it's essential to clearly understand why we are pursuing such actions.

Putting one criminal in jail will not eliminate fraud. Instead, organisations must take a broader perspective and bring in fraud experts to identify the root causes and underlying factors contributing to fraudulent activities. 

A cross-system approach is necessary, involving multiple stakeholders and partners to tackle fraud comprehensively and sustainably.


The Importance of Social Network Analytics

Social network analytics is a powerful tool for detecting fraudulent activities. By analysing the connections between individuals, organisations can identify those with few or no connections to anyone else, indicating organised criminality. 

For instance, fraudsters may use government loan schemes by applying for multiple loans under different identities. By using social network analytics, organisations can identify these individuals and prevent them from exploiting the system.

However, fraudsters are always looking for new ways to commit fraud. Organisations must remain vigilant and dive deeper into specific areas to explore issues that may not be immediately evident. This requires continuously innovating and adopting new technologies, tools and techniques that can help detect and prevent fraudulent activities.

Ultimately, by applying social network analytics and exploring other innovative approaches to fraud prevention, organisations can safeguard their operations and prevent criminals from exploiting the system.


Looking Forward

In the future, we must continue prioritising fraud prevention measures, such as changing internal processes, introducing legislation, and collaborating nationally and internationally with partners. 

We can't rely on a single silver bullet to address fraud and organisations must be ambitious with what they have and explore new technologies to stay ahead of fraudsters.

By applying the lessons learned during the pandemic, we can strengthen ourselves in the fight against fraud and ensure that we're better equipped to address future challenges.


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