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Fingerprints help local banks to beat fraud

Published Jan 29, 2014

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Johannesburg - In an initiative to combat identity theft, some South African banks have rolled out a biometric fingerprint system, while others are in the process of doing so.

The biometric fingerprint system enables banks to verify the identity of consenting customers against Department of Home Affairs records.

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Business Report reported last week on a sophisticated case of fraud and identity theft involving criminals with an intricate knowledge of the property system who transferred ownership of a luxury home in Johannesburg without the knowledge of the owners or the new “owner” and, in the process, defrauded Standard Bank of R11.8 million.

Susan Potgieter, the general manager for commercial crime at the SA Banking Risk Information Centre (Sabric), said the roll-out of biometrics would add value to prevention measures already in place.

If an impostor applied for credit or for access to banking facilities, the fraud would be identified immediately because the fingerprints would not match those of the person whose identity had been compromised, she said.

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“We hope the majority of the banks will have rolled out [the technology] fully in the next 18 months,” Potgieter said.

The sophisticated property fraud and identity theft case involving Standard Bank was completed in March last year, when ownership of the Sandhurst property was transferred at the deeds office.

The illegal transaction was discovered only when the owner received an offer to purchase and discovered the house had been sold and transferred.

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Every step of the transaction was fraudulent, including the offer to purchase, the loan application, City of Johannesburg rates clearance certificate, SA Revenue Service transfer duty receipt, transfer documentation and mortgage loan application.

The owner and supposed new purchaser were the victims of identify fraud, with their signatures being forged on all documents and the identity documents of the “purchaser”, with a false photograph, presented when an R11.8m loan agreement was signed with the conveyancing attorneys appointed by the bank.

The loan was subsequently withdrawn from the account.

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The implementation of the biometric fingerprint system at banks follows Sabric and the Department of Home Affairs entering into a co-operation agreement in 2007 to address bank-related identity fraud.

Absa became the first of the major banks to go live with the interface, in November 2011.

Standard Bank was in the process of implementing the system, spokesman Ross Linstrom said yesterday.

Barry de Witt, the chief executive of banking channels at FNB, said it had implemented the interface in its branches “for some time”.

Nedbank said it had been piloting the biometrics access control system in a few branches since 2010.

Potgieter said identity theft remained prevalent and formed an integral part of the modus operandi of most commercial crimes, including home loan fraud.

She said the method for home loan fraud varied from simple applications to complex and sophisticated schemes.

“The banks have robust crime prevention measures incorporated in their home loan application processes and by far the majority of these attempted frauds are fortunately unsuccessful.

“The banking industry continues to take the combating of home loan fraud seriously as the values involved could be significant. Sabric is not aware of increased criminal activity.” - Business Report

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