How can investigation software help government tackle fraud?

Fraud is a massive problem for the UK public sector. However, government bodies only detect a fraction of fraudulent activity – the vast majority of incidents go un-investigated and unpunished.

It’s difficult to find any real detail on the huge scale of the problem, but we can thank Mark Cheeseman, Deputy Director of Public Sector Fraud at the Cabinet Office, for giving an insightful talk at the University of Portsmouth back in 2015. Despite being low-key and unheralded at the time, Cheeseman’s presentation gives an excellent analysis of the challenges posed by fraud and deserves wider attention.

According to Cheeseman, the Department for Work and Pensions alone loses £5.3bn a year in fraudulent activity, yet in 2014 it detected only around £90m – £100m of that figure. Extrapolate these numbers out to the £720 billion a year the government spends in total, and the amount of fraud that likely goes undetected is staggering. In fact, it’s estimated £40.3 billion was lost due to fraudulent activity in 2017.

One of the main barriers to tackling unseen fraud, says Cheeseman, is that public bodies can only deal with the fraud they know about, so more needs to be done to detect fraudulent activity in the first place. Also, he says, the public sector is too reactive and focused on investigations and is not prepared for the increased complexity of fraud cases.

Unfortunately, there’s no easy solution to the problem of unseen fraud. It will require a combination of measures, including new legislation, training and a change in culture within the public sector – but most importantly the government needs to make use of new technology. Investigation software is the only way to tackle the increasingly complex world of governmental fraud. And it does so in a multitude of ways.

Technology can evolve to combat new types of fraud

The fraud of 2018 will not be the fraud of 2020, so it’s vital that fraud prevention tools are flexible and configurable.

We know that technology has created new opportunities for fraudulent activity and that criminals are using tech to carry out fraud on an industrial scale. According to Experian, consumer online banking fraud has grown by 226% and telephone banking fraud by 178% in the past year, and there’s no reason to think that the public sector is safe from this rise in cybercrime. To keep pace with criminals and stem the losses, the public sector needs to use software that is capable of evolving to deal with new threats.

Current methods of fraud detection aren’t working, so Government departments need new ways of handling, recording and analysing fraud, which requires state of the art investigation software with strong, inbuilt intelligence and analytical tools.

Technology can improve collaboration

The UK Government has committed to a policy of interdepartmental collaboration with the publication of its Open Standards principles in 2012. Interoperability, however, remains a challenge. As Cheeseman explains in his talk, a lot of fraud still goes undetected because the crimes move between several government departments. If those departments aren’t speaking to one another, then it’s easier for fraudsters to slip through the net.

Investigation software, with secure plug-and-play APIs (tools that enable data exchange between systems), can assist in opening the lines of communication and investigation between government departments and law enforcement. Open exchanges of data can connect the dots that may otherwise remain hidden.

To achieve this, government and law enforcement need to mandate that all new systems have secure and documented APIs at the procurement stage.

AI for connecting dots

The increasing complexity of digital fraud coupled with the vast amounts of data created by government departments means it’s easy for investigators to overlook potential links between suspected incidents or, indeed, past cases of fraud. It also demands smarter ways of investigating.

The ability to analyse huge quantities of data is made possible thanks to smart data analysis and artificial intelligence. The press generally reports on AI in two ways: catastrophising or mythologising. Sometimes it’s both. Alongside articles are illustrations of highly intelligent cyborgs coming to steal our jobs, but it’s a reductive look at a significant technological advancement. Simply, without AI, investigators cannot analyse the increasingly large datasets that they need to deal with daily.

Smart investigation software should be able to proactively tell an investigator whether there is a match between, for example, the large mobile phone download they have just imported into their investigation, and a case from two years ago. It should be able to tell a user who has just searched for a person that someone else searched for that name six months ago.

For fraud investigations in government, investigation software should automate the process of identifying patterns and links across very large datasets which would otherwise be impossible to do manually. This is the reality of AI in intelligence software.

It makes fraud reporting easier

It’s impossible for a fraud lead, line manager or department head to see everything. Technology can help uncover more unseen fraud simply by making that reporting process easier for everyone. Often workers on the front line are aware fraud is taking place but either aren’t comfortable documenting it or don’t know how to. The government can discover more unseen fraud if it provided employees with simple, intuitive methods of reporting instances.

Modern investigation software can encourage a higher level of fraud reporting through the use of familiar and intuitive tools (such as web forms or apps) which can take people through the reporting journey in their own time and with their chosen level of anonymity.

The NHS Counter Fraud Authority’s website is a good example of how to create a simple, user-friendly system that encourages employees to report fraud.

In conclusion

A technology-led approach is the only way to combat the threat posed by modern, industrialised fraud. The government is losing billions each year and needs to act fast to bring its prevention methods up to date.

That said, technology should not be considered a silver bullet. According to Cheeseman, the public sector is fundamentally scared of finding fraud: it creates more work for employees to deal with and uncovering unseen fraud is, understandably, seen as a lower priority compared to delivering good public services.

But while it’s true that new technology will uncover more unseen fraud, it will also help alleviate the extra workload. This is because investigation software can be used to process, analyse and take enforcement action against new fraud cases.

So while making it easier to report fraud and to spot links between evidence is a huge step in the right direction, creating a culture conducive to uncovering and tackling fraud is also crucial to solving the problem.

investigation software has to play a central role in the government’s fraud strategy, but it must come hand-in-hand with a broader cultural shift within the public sector that gives employees the proper incentives for rooting out unseen fraud.