Who are you? - the reality of identity fraud

21 January 2016

When I first became a finance director I had to get used to signing a lot of cheques. This was partly because there was very little electronic transfer at the time and partly because, by signing, the finance director fulfilled a key part of internal control. An interesting by-product was that my signature became much simpler and quicker to write, which made it much easier for my children to forge various sick notes for school.

I now rarely sign a cheque but instead I frequently find myself asked to sign for identity checks. This might be as part of anti money laundering practice or for personal responsibilities where even a new phone contract can include a credit check. Sometimes this all seems ridiculous or even if we understand why it is being done, like the safety precautions at airports, the procedures seem poorly designed.

Unfortunately there are regular examples of the controls being circumvented and large amounts of money being stolen through identity fraud. Only last week a contact in the property sector lost £20,000 because he had been persuaded to change bank details by fraudsters impersonating contractors well known to him. It is often difficult to recover money lost so it is well worth spending time reinforcing internal controls.

Many charities used to require dual signatories for payments but that is becoming rare especially as electronic banking systems tend not to be able to provide this service. It is however possible to ensure sign off a payment run and for a separate individual to make the payments.

If you would like to discuss strengthening internal controls, please contact Chris Harris.