Fraud – it’s a word that makes many of us shudder and a crime that continues to impact the industry as a whole.
Santander UK recently gathered representatives from our key accounts in our Milton Keynes head office to hear from our fraud investigation, financial crime and cyber-crime teams about the current trends we’re seeing and talk about how a few simple techniques can stop fraudulent applications at source.
False employment
False employment details have long been a factor in mortgage applications and occurrences of “staged income” continue, such as fake payslips, amended bank statements or the applicant being unknown to the stated employer. These are the cases an adviser can stop at source with the following techniques.
Advisers should ask: do these bank statements and income reflect the lifestyle the customer is telling me about? If not, then we could be dealing with mortgage fraud.
We have also seen fraudulent applications where multiple sources of income are declared for an applicant, one genuine and one false. The latter is often from self-employment. Santander has experienced fraud investigation teams and uses specialised tools to detect these cases, but brokers play a key role in terms of the first line of defence.
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Where a customer is known to an adviser it can be easy to work out fact from fiction, but advisers should have enhanced controls in place for newly onboarded customers and understand the source of any referral. Introducers remain an area of concern.
Firms should protect themselves with formal written agreements and regular reviews with their introducers and should have methods to assess the ongoing quality of the leads they receive. Due diligence should be carried out on any new introducer and enhanced Know Your Customer (KYC) protocols used on non-face-to-face and online referrals.
An adviser’s gut feeling is a key tool too – if it feels wrong it likely is wrong.
Trust your judgement on this. Ask the applicant to explain their job role to you if you have concerns – open questions are a great tool. Open-source checks on employers are also simple and effective. A simple Google search of the employer can tell you a lot.
If they have no online presence or a very limited one, does that match the suggested job type, income and payslips that you are presented with? Companies House gives snapshots on a business’s health, can a firm with little shareholder funds be paying the salary being suggested to you?
Deposit source
Customer deposit source is another area where extra questions can uncover important facts. The regulator is focusing on lender activity in this space and as a result, lenders will look to update their questioning at the application stage without extending the broker-customer journey. Where the deposit comes from a high-risk country extra due diligence checks will be employed.
The need to understand the source of customer deposit funds will remain very important.
While fraud continues to be a complex and evolving crime, we’ll continue to do all we can to tap into the resources and specialisms that we have on offer to help our key mortgage partners feel empowered in stopping fraud from the outset.
