Using big data to combat SA’s scourge of corruption

Keith Wardell, Director of fraud and identity at TransUnion. (Picture: Supplied)
Keith Wardell, Director of fraud and identity at TransUnion. (Picture: Supplied)

As a credit bureau TransUnion has access to a big consumer data universe.

It holds a wealth of information on consumers — their payment profiles (affording the bureau an understanding of how financially distressed someone is), information on the ownership of assets such as vehicles and properties, including how much is still outstanding on them, and more.

TransUnion essentially has a bird’s-eye view of the financial standing of the average South African consumer, making it uniquely placed to help with the fight against corruption with the rollout of its Lifestyle Assessment – a service that enables organisations to identify fraud and corruption indicators linked to employees and suppliers.

TransUnion runs this service on employees and suppliers on behalf of organisations – sometimes not to find the rotten apple, but to also help find apples that are at a greater risk of rotting — in what they call risk segmentation. 

Finding the devil in the detail

According to Keith Wardell, director of fraud and ID at TransUnion, companies are becoming less inclined to leave the detection of fraud to chance or tip-offs and are taking a proactive stance to combat the scourge of economic crime.

“Assets like cars and property are one of the most common things bought when people are perpetrating fraud,” says Wardell. In some real-life cases perpetrators will not go for the Ferraris or Maseratis but purchase five or six cars and distribute them among family members, he says.

With TransUnion’s service, an entire organisation, or high-risk business area, can go through a lifestyle assessment that segments and highlights individual issues such as inconsistencies in earnings and assets. During recruitment, potential new hires can be pre-screened to uncover any potential issues.

TransUnion aims to, for example, identify any potential collusion and conflicts of interest between employees and suppliers. The conflict of interest can also be split into direct, indirect and potential linkages between employees and suppliers.

Tapping into Home Affairs data has also helped in mapping out just how far an economic crime network can extend, for example, establishing relations between the recipients of the five or six cars and the perpetrator.

When TransUnion ran a lifestyle assessment for one public sector organisation, it uncovered three dead or ‘ghost’ employees who, although deceased, were drawing an income from the organisation.

Some analysis extends as far as telecommunications — people swap or go through different SIM cards frequently, however, “multiple SIM cards going in and out of a device more than three times within five days gives rise to strong suspicion that the person is a member of a syndicate,” explains Wardell.

“In one public sector case, three employees were linked to 30 SIM cards over a two-month period. On average that is ten SIM cards each.”

The legality of lifestyle assessments and use of consumer data

There is, of course, great concern when working with consumer or employees’ data, one of which is consent for it to either be accessed and/or used.

Regulation 18(4)(b) of the National Consumer Credit Act permits credit bureaus like TransUnion to make use of consumer credit information for fraud detection and prevention purposes, of which the lifestyle assessment is a part.

“Organisations actually end up spending two to ten times more on investigations [after the fact] than the original amount lost to fraud corruption.”

Employees are increasingly committing economic crime, including fraud, and the internal actor is actually the one you should be concerned with, Wardell cautions. He says 64% of all fraud is perpetrated by someone internally.

Lifestyle assessments run from R600 per employee and take an average of four weeks to conduct.

This article originally appeared in the 29 August edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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