The Hindu Business Line : Software to check demat-like scams

Fraudsters are continually changing their method of attack, seeking out new opportunities or markets as financial frauds become increasingly sophisticated.

Monitoring through technology helps stay one-step ahead of the fraudsters.

Incidents such as the recent demat scam involving two public offers from IDFC and Yes Bank make it plain enough that concerted effort where technology can play a crucial role is the need of the hour, according to an expert in this field.

Fraud solutions tackle fraud at each stage from prevention, detection or investigation. With constant monitoring, it is possible to continually improve detection and accuracy rates. The issue assumes importance since demat accounts are easy to set up.

The Managing Director of Fraud Prevention Solution Business, Experian, a UK-based information solutions provider, Mr Gary Wood, said, "It is possible to identify fictitious and fraudulent applications. The key to fraud prevention is to prevent fraud from happening in the first place, during the application stage.

"While we cannot comment on the specifics of the demat case, for instance, Experian's Hunter solution identifies fictitious/fraudulent applications. This ensures that previously fraudulent, suspect, declined or multiple applications can be identified."

The use of an alias or false names, false employment details and impersonation such as the use of a deceased person's details can also be matched and highlighted through the system. It is possible to pick up inconsistencies and passed to the regulatory authority." Global enterprises are addressing this by installing robust systems in place. In the past, fraud was often hidden under the banner of bad debt for fear of reputation damage.

Experian's Hunter is established in the UK, Australia and South Africa and is being rolled out throughout the world. Its portfolio encompasses fraud prevention, detection and investigation.

Fraud is one of the biggest causes of revenue loss for the financial services industry and the risk of fraud is staggering. Up to 5 per cent of applications are likely to involve impersonation fraud, up to 25 per cent of applications are likely to contain manipulated data and up to eight per cent of UK applications processed through Hunter match against known+ frauds.

As the financial services markets are increasingly interlinked, Mr Wood said "new trends are always emerging, especially in new emerging markets or new financial powers. A lot can be learnt from established markets that use fraud prevention measures to great effect".

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