Government and banks unite to fight fraud

Pretoria – The Department of Home Affairs says it will continue to build its working relationship with the banking and insurance industries to curb fraud, particularly identity theft, and its resultant financial implications.

Home Affairs Minister Malusi Gigaba on Tuesday met with representatives of the banking and insurance industries — the South African Banking Risk Information Centre (SABRIC) and the Financial Services Exchange, trading as ASTUTE — to discuss identity fraud, irregular insurance claims and related crimes.

The partnership between Home Affairs and the banking industry dates back to around 2007, which saw the Online Fingerprint Verification System being officially launched in 2009.

Through this initiative, banks are allowed access to the Home Affairs National Identification System (HANIS), so they can verify the identity of their prospective and current clients, using their fingerprints.

Minister Gigaba said the use of HANIS verification services is increasing steadily. This strategic initiative ensures that people’s savings, investments, deposits and earnings are secure.

“Reports received from banks show syndicates now know that they cannot get away with ID photo replacements due to the HANIS verification. Identity fraud has therefore decreased.

“If we are further to quantify the gains, we would say that the HANIS Verification Service potentially prevents R322 million loss per month. Thus, an annual potential prevention estimate could come to about R3.8 billion. We are mindful also of the difficulty entailed in quantifying identity fraud,” said Minister Gigaba.

The initiative started out with ABSA, African Bank, FNB, Nedbank and Standard Bank. It is also with most of these banks that Home Affairs recently launched the partnership to fast-track the rollout of the Smart ID Card, which is designed to protect identity while curbing fraud and corruption.

As of December 2015, there are now seven participating banks using HANIS verification. There is involvement from 3 682 branches, using 16 058 finger-scanning devices. The number of transactions sent to HANIS are increasing significantly, with bank transaction volumes now 2.5 million a month and up to 150 000 per day.

Insurance fraud

Home Affairs has a Memorandum of Understanding with life insurers who are organised under the banner of the Association for Savings and Investment South Africa (ASISA) to help tackle the high levels of fraud plaguing the industry.

This public-private initiative provides participating companies with a direct link to the National Population Register, so they can verify various aspects of personal identity and documents like death certificates. The Verification of Personal Details system went live on 9 September 2014.

“The system allows for consistent automated processes to detect irregularities that can assist with fraud prevention, and therefore has been instrumental in the ‘all-out’ fight against fraudulent insurance claims.

“Using this system, participating insurance companies have been able to fast track the payment of valid claims in favour of beneficiaries who at times desperately need the funds. It has lowered in significant ways the number of fraudulent claims that are paid by insurance Companies. This has resulted in companies saving millions of rand,” said Minister Gigaba.

According to ASISA, the total number of irregular death and funeral claims detected in 2014 was more than three times higher than in 2013. In 2014, 7 360 fraudulent claims were stopped, compared to only 2 093 in 2013. The value of the claims in 2014 was slightly lower at R402.8 million compared to R 524.6 million in 2013.

ASTUTE CEO Jacques Rossouw said they celebrate the success of the private and public sector, as there is a need to integrate the systems. “The success of preventing fraud starts with collaboration.”

Kalyani Pillay, the South African Banking Risk Information Centre (SABRIC) CEO, said banks are very robust in making sure that they protect their clients. Pillay commended the department on the introduction of the Smart ID Card.

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