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New birth records data match to prevent false identity fraud

12 October 2007.

The Ministry of Social Development today confirmed that benefit records are being data matched against birth records in an effort to prevent false identity fraud after the sentencing today of multiple benefit fraudster Wayne Patterson.

12 October 2007
For Immediate Release

The Ministry of Social Development today confirmed that benefit records are being data matched against birth records in an effort to prevent false identity fraud after the sentencing today of multiple benefit fraudster Wayne Patterson.

48 year old Patterson was today jailed for 8 years in the Auckland High Court on 10 representative charges in relation to a $3.4 million benefit fraud involving 123 false identities.

Ministry of Social Development Chief Executive Peter Hughes welcomed the sentence but warned that the Patterson fraud showed that high-end identity fraud has officially arrived in New Zealand.

Mr Hughes said that there was also one other case involving alleged identity fraud currently before the courts. 31 year old Brooke Bartlett has pleaded not guilty to charges in relation to a $570,000 benefit fraud involving 17 false identities. He appears again in the North Shore District Court in November 2007 for a depositions hearing. Mr Hughes said he would not comment further on this case while it was still before the courts.

The Patterson fraud was the first significant example in New Zealand of the international trend towards high-end identity-related frauds. It was a thorough, deliberate and very well organised fraud, and was elaborate and sophisticated.

It was undertaken using high quality fake birth certificates that were used to establish separate false identities. Patterson used these fake birth certificates to obtain secondary ID such as Drivers Licences, Community Services Cards and IRD numbers, and to gain access to services such as bank accounts and PO Boxes.

He used each of the unique identities, made up of forged and fraudulently obtained ID, to obtain access to the benefit system.

"On detection of this fraud I commissioned accounting firm KPMG to independently review the Ministry of Social Development's identity related controls on clients entering the benefit system," said Peter Hughes.

The KPMG Review findings show that the Ministry's processes for verifying identity were consistently and appropriately applied, and that they meet the key elements of the Government's recently released Evidence of Identity Standard.

The report says that the Ministry has a strong suite of controls to ensure it obtains reasonable evidence of the identity of people applying for benefit but like any system, the controls cannot provide absolute assurances where there is a concerted effort to defraud. This is because the cost in terms of dollars, resources and impact on service delivery is likely to outweigh the benefits of introducing more onerous identification controls.

It goes on to say that the Ministry's controls could not have prevented this fraud from occurring. This accords with international experience that normal organisational controls are generally not effective in detecting elaborate identity frauds.

"The only solution is to implement a daily 100% data match on birth records for all new people claiming a benefit. This will limit the available New Zealand born identities to those of real persons. It will prevent false identities but will not prevent identity theft," said Peter Hughes.

"Working closely with the Department of Internal Affairs we began an electronic birth data match in April 2007. Between then and the fraud being detected, we instigated a daily manual checking system for those benefit applicants who did not have photo ID or who fit our risk profile.

"The Ministry also matches benefit records against the Deaths and Marriages register.

"Since the new data match has been implemented we have checked 171,000 cases and there have been no cases of identity fraud.

"Our experience from these two frauds shows that the only way to prevent identity fraud is to achieve tighter integration across the systems and controls of a range of Government agencies.

"The Department of Internal Affairs is leading a cross-government working group to look at ways of ensuring consistent protection against identity fraud across government. Agencies involved include the Ministry of Social Development, the State Services Commission, Inland Revenue, New Zealand Police, and Land Transport New Zealand.

"Working together across all of our systems offers the best opportunity to achieve improvements that will make it more difficult for criminals to commit fraud against New Zealand agencies," said Peter Hughes.