SmartSearch calls on property industry to learn from govt’s loan fraud mistakes

SmartSearch has called on lenders, brokers and conveyancers to learn from the government’s failure to prevent the loss of billions of pounds in COVID-related fraud over the past 12 months.

As the Treasury made vital funds available to support businesses through 2020, SmartSearch suggested that a lack of due diligence and robust ID verification “left the door wide open” to organised crime gangs to exploit the opportunity.

CEO at the anti-money laundering (AML) solution provider, John Dobson, said these frauds were made possible due to a lack of joined up systems, despite all the information being available to raise flags when bogus applications were being made.

More than £40bn has been loaned to struggling firms through the Bounce Back Loan scheme, but government estimates suggest that nearly two-thirds of loans may never be repaid, due to mistakes in the process and fraudulent claims.

Without moving to more secure methods of verification, Dobson has warned that regulated firms in the property sector face the same threat.

“The Bounce Back Loan scheme is one of a number of funds made available since the start of the coronavirus pandemic which have been targeted by fraudsters, and they have probably found it surprisingly easy to work the system,” he commented.

“This should serve as a stark reminder to all regulated businesses that when it comes to fraud we should be working at a heightened state of alert because as long as you’re using manual methods of ID verification, you’re going to be vulnerable.”

Dobson added that a key lesson to be learnt from the past 12 months is that increasing use of technology is the most effective way to protect a business from falling victim to fraud.

“The whole essence of an electronic verification solution is that all the information is there in one place, and easily accessible so that anybody in the business can use it, it’s not technically complicated in that sense,” he said.

“If the government departments responsible for handing out the Bounce Back loans had been using an electronic verification system to vet applicants, they could have found out almost instantly whether they were genuine.

“With the property market remaining such a high priority target for criminals, it’s vital not to repeat the mistakes made by the government in allowing billions to be lost.”

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