How to Know Your Citizens and Prevent Fraud

Barley Laing, UK Managing Director at Melissa
January 18, 2023

According to the Cabinet Office, fraud and error in public spending are estimated to cost taxpayers up to £51.8 billion every year, which is larger than the UK's annual defence budget. As public sector services become increasingly accessible online, this figure is set to rise, demonstrating how cybercrime is being driven by evolving technology and the cost of living crisis.

This means it’s even more important to know your citizen (KYC) to make certain they are who they say they are and are legitimately entitled to the services offered. Additionally, those who put processes in place to deliver KYC will benefit from obtaining a single citizen view (SCV). This will enable the personalisation of communications, improvement to the delivery of services and overall user experience, and greater operational efficiency – all vital during a period of high inflation and reduced budgets.

How to effectively deliver KYC

It is best to start by having processes in place to cleanse and standardise user data held in batch, as well as the moment new data is collected. The data cleansing tools used in this process should enhance the data by filling in any missing contact details in real-time. Doing so will help deliver KYC and reduce the likelihood of fraud.

For example, address validation for proof of address matches a name to an address and is vital to the data hygiene process. It highlights inaccurate addresses, whether because of a typo or a malformed address, which can be easily corrected. Additionally, it flags instances in which someone has provided an address that they are not associated with, potentially for fraudulent purposes. 

It is important to realise that because ID checks will pick up rudimentary things, such as an incorrectly formatted address, ensuring accurate user contact data prior to undertaking ID verification is a best practice that offers much greater value. Also, an address check is about 1/50th the cost of an ID check.


Data decays quickly

Unfortunately, 91 per cent of organisations have common data quality problems, with user contact data lacking regular intervention degrading at 25 per cent a year. Also, 20 per cent of addresses entered online contain errors; these include spelling mistakes, wrong house numbers, and incorrect postcodes, that are primarily caused by people mistyping their details into small keyboards on their mobile devices.

The good news is that incorrect contact data can be easily fixed, often with simple and cost-effective changes that help with KYC and SCV as part of the data quality regimen.


Autocomplete prevents input errors

Technology is leading the way in cleaning data, ID verification, and delivering KYC. One of the most valuable pieces of technology for the public sector is an address autocomplete or lookup service. This tool can gather accurate address data in real-time at the onboarding stage by providing a properly formatted, correct address when the user starts to input theirs. It also enables convenience by reducing the number of keystrokes required, by up to 81 per cent, when typing an address. This speeds up the onboarding process and reduces the probability of the user not completing an application to access a service.

The first point of contact verification can be extended to email and phone so that these valuable contact data channels can also be verified in real-time. This ensures the ability to communicate effectively with users, not just on the first occasion but on an ongoing basis.


Match and dedupe

When it comes to data quality focus on data duplication is equally important, particularly as the average database contains 8-10 per cent duplicate records. This issue is commonly caused when two departments merge their data and mistakes in contact data collection occur at different touchpoints. Duplication adds cost in terms of time and money, particularly with printed communications, the distribution of which can also adversely impact the sender’s reputation. Recipients will see this excess as a waste of public money, particularly at a challenging time for public sector finances.

To prevent such waste, engage an advanced fuzzy matching tool to deduplicate data. By merging and purging the most challenging records it’s possible to create a ‘single user record’ and obtain an optimum SCV. Organising contact data this way will also maximise efficiency and cost reduction because multiple outreach efforts will not be made to the same person. Additionally, the potential for fraud is reduced by establishing a unified record for each citizen.


Data suppression / cleaning

A vital part of the KYC process is data suppression, or cleaning, using the appropriate technology that highlights people who have moved or are no longer at the address on file. As well as removing bad addresses, these services can include deceased flagging to stop the sending of mail and other communications to those who have passed away, which can potentially upset their friends and relatives. It’s ethical to use these suppression strategies that help public bodies to save money, protect their reputations, and avoid fraud.


SaaS powers today’s data quality efforts

It’s never been easier or more cost-effective to manage data quality in real-time. Today, Melissa’s Unison licence provides access to a scalable data cleaning software as a service (SaaS) platform that requires no coding, integration, or training. Simply plug in and benefit immediately. This technology instantly cleanses and corrects names, addresses, email addresses, and telephone numbers worldwide. It matches records in real-time, ensuring no duplication, and delivers data profiling to help identify issues for further action. A single, intuitive interface provides tools for data standardisation, validation, and enrichment, resulting in high-quality contact information across multiple databases.


Electronic ID verification (eIDV) 

Unfortunately, data hygiene practices on their own aren’t enough to deliver KYC and prevent fraud. Forward-thinking public sector organisations are already using identity verification services, such as electronic ID verification or eIDV. These tools deliver cross-checks against an individual's contact data – name, address, phone, and email address – in real-time, supporting a hassle-free user experience. To work effectively, the eIDV service must have access to a dataset of billions of consumer records, including reputable third-party, sanctions, and politically exposed person (PEP) data, from reputable global streams, including government agencies, credit agencies, and utility records. Ideally, the service should, at the same time, enrich the data of those held on databases, highlighting and correcting any existing inaccuracies. Such an approach maintains solid governance by aiding compliance with KYC and anti-money laundering (AML) regulations. 

With the move to digital, the public sector must embrace automated eIDV in lieu of the manual ID checks that many still have in place, despite being more expensive, time-consuming, and subject to human error.


Know Your Business (KYB)

For best practice, alongside KYC, public sector organisations should put procedures in place to ‘know your business’ (KYB), to fully understand the risks posed by new and ongoing business and supplier relationships.

Understanding what’s behind the business fosters authenticity and protection against corrupt or fraudulent business practices. Such an approach will help prevent financial crime, such as money laundering and terror financing, which could result in significant reputational damage, apart from any monetary cost resulting from such a relationship.


Tackling fraud with KYC

While there’s no legal requirement for the public sector to undertake KYC, delivering practices that support its provision is essential. This includes sourcing and using relevant technology to safeguard contact data quality and ID verification.

Once those in the public sector put in place procedures to deliver KYC, it will not only help them to prevent fraud but will provide insight that will deliver a better experience for users, as well as improve efficiencies at a very challenging time for their budgets.

Barley Laing, the UK Managing Director at Melissa, will be providing a seminar on this topic, along with Mairead Brophy of Lambeth Council, at Counter Fraud 2023. Also, Melissa will be exhibiting at stand: 8.