ID fraud costs country R40bn a year

Fingerprint-it presents

ID fraud costs country R40bn a year

By Edwin Naidu

As government goes ahead with its plans to introduce new "smartcard" identity cards, criminals are fleecing the South African economy of billions of rands.

"Thefts through the use of the bar-coded identity document are causing many problems and something has to be done quickly," said Pat Cunningham of South African Fraud Prevention Services.

Cunningham said the organisation had a list of 45 000 names on its database of people who had committed fraud by using identity documents that did not belong to them.

The database, which is shared among several industry players, helped to prevent fraud of a possible R400-million last year.

'The buoyant economy over the past few years has fuelled fraud'

"All major banks, furniture and supermarket retailers, microlenders and motor finance corporations linked to our organisation reported a huge increase in fraud."

Cunningham said fraud through improper use of identity documents went up by 29 percent last year to an estimated R40-billion.

Delegates at a conference hosted by PriceWaterhouseCoopers in Sandton last week were told that white-collar crime was costing the economy an estimated R80-billion, with more than 40 000 cases a year reported.

Green ID books with a barcode are already commonly used. The book contains a photograph and fingerprint of the holder, but the photograph can easily be replaced. The government plans to replace the green book with a barcode on a credit card-style ID with personal details stored on a microchip.

Although the government originally considered issuing the smartcards for free and charging for subsequent replacements, it will charge around R120 per person during the R1,5-billion roll-out expected to occur over five years.

'We are putting all fingerprints collected when individuals apply onto a digital system'

The smartcard will also replace the old reference books and blue pass books which, although accepted as ID by some financial institutions, do not allow the bearer to vote. Only South Africans with a bar-coded identity book are allowed to vote.

The current ID book has been described by home affairs officials as easy to forge, allowing criminals to take advantage of delays in introducing the new card.

"The buoyant economy over the past few years has fuelled fraud," said Fred Steffers, managing director of the Consumer Profile Bureau (CPB). He said crimes involving the fraudulent use of identity documents were costing the economy billions of rands.

"Fraud is escalating on a daily basis. Using the identity document is an easy way to commit a crime and the chances of getting caught are low," he said.

Credit was easily available because of the booming economy: "In some instances one need only provide an ID number and address to obtain credit. Three months later the original owner of the number is chased for non-payment."

The home affairs department has also received thousands of complaints of the use of ID documents in fake marriages.

Nkosana Sibuya, a spokesperson for the department of home affairs, said the department was still in the planning stages of introducing the smartcard ID.

"We are putting all fingerprints collected when individuals apply onto a digital system. We hope to finish by September and then start rolling out the smartcard," he said.

The government had allocated R270-million to the ID smartcard project, another R132-million for back-record conversion, R44,4-million for an electronic document management system, R15,2million for the redesign of a population register and R72,2-million for the rewrite of the movement control system. Tenders for the issue of the smartcard would go out once the cabinet had given its approval, Sibuya said.

The home affairs national identification system (Hanis) project consists of three components: the automated fingerprint identification system (Afis), the integration of systems, and the smartcard.

"We have moved to implement the two first components with the introduction of the electronic document management system as well as a back-record conversion process to convert all fingerprint records to electronic format to allow for online biometric verification. We are targeting to complete the digitising process by September," Sibuya said.

It was hoped the first ID smartcards would be issued by the end of this year. The first recipients of the cards will be beneficiaries of state social development grants.