Identity fraud is on the rise
Identity fraud refers not only to identity theft but also to the voluntary transfer of identity to the use of another person, often in exchange for financial compensation. Identity fraud also includes registering an individual in the Population Information System using incorrect information or grounds.
Identity theft, i.e. the unlawful use of another person’s name or personal data, was criminalised in 2015. Identity theft and unauthorised or authorised takeover of another person’s identity lay the foundation for fraud. For example, another individual’s information may be used to buy products in online shops and other sales platforms or to get loans and instant cash loans from financial institutions. A false identity may also be used to open customer accounts or bank accounts. In recent years, public authorities have been informed of extensive data breaches that have involved accessing a large amount of personal data and later using it for criminal purposes.
Identity fraud cases have increased in economic crime
In business, identity fraud includes naming the wrong persons as the company’s persons in charge or employees. Companies and their data are often used in subscription fraud, in which different purchases are invoiced from the company. The company’s activities may sometimes be based solely on fraudulent activities and the company does not engage in actual business activities. In such situations, the case does not necessarily concern an actual economic crime. Identity fraud is also a money laundering instrument used to conceal the real owner of assets. Identity fraud may be used to simultaneously scam the Tax Administration, Kela, labour market organisations, insurance companies and financial institutions, for instance.
Frauds reported to the public authorities are not confined within Finland’s borders. Many operators have international links with, for example, the Baltic states and other European countries or organised crime.
Identity fraud quickly results in major financial damage
It is characteristic of identity fraud to quickly cause major financial damage and produce major financial gain through criminal activity. Once the money has been transferred abroad, it is often difficult or even impossible to return it to the victim of the crime.
In recent years, dozens of Finnish companies have been subjected to scams or scam attempts that have involved impersonating the company’s manager and therefore deceiving its financial administration to pay large sums of money to criminals’ accounts. So-called CEO fraud often involves internationally organised criminal activity. Such fraud is often based on careful preparation, which typically makes use of information available from open sources. It also makes use of social manipulation to persuade the victim to act in a way that is beneficial to the criminal. As a part of the efforts to combat various types of fraud, CEO fraud is one of the focus areas of international police work, and this has made it possible to prevent some criminal damage from occurring.
In cases of identity fraud against companies, there have been attempts to collect unjustified VAT refunds from the Tax Administration, making use of fraudulent changes in account numbers and falsified Annual General Meeting minutes. The efforts made have succeeded in preventing unjustified VAT refunds amounting to tens of millions of euros, and supervision is also constantly developed to combat fraud that involves identity fraud.
Prevention is the best way to prevent personal data fraud
The processing of personal data emphasises the responsibility for careful and correct data use. The victims of identity fraud cases may include private individuals, companies or society. Providing information about phenomena related to identity fraud is an effective way to prevent fraud.
Companies should regularly check whether the information on the company in different information systems (incl. the Trade Register) is correct and unchanged. Companies can also monitor the changes in their company’s details in the Trade Register based on the notification of changes [.fi]› received by email. Companies should always contact the public authorities in cases of suspected offences.
It is very important for private individuals to protect their identity data, especially personal identity codes and banking details. Prohibition of registration to the Finnish Trade Register [.fi]› allows you to prevent a company or corporate entity from registering you as a responsible person in the Finnish Trade Register, the Finnish Register of Associations and the Finnish Register of Foundation without separate consent.
To combat the phenomenon, there is a need to improve the efficiency of the exchange of information between the authorities both at the national and international levels. In Finland, the effectiveness of prevention could be enhanced by means such as enabling an authority to disclose information on an identity subject to fraud to other authorities.
Read more about preventing identity misuse on the vero.fi website [.fi]›