Helping government grant makers to reduce and tackle fraud

In my previous article I looked at the many types of fraud that government grant makers need to identify and take steps to prevent.

This is no easy task, particularly as the government has made more grants available to individuals and businesses to support them through the pandemic. As the volume of available grants increases, fraudsters continue to find new and evolving ways to strike.

At Capita we believe that digital technology can lead the fight-back against grant fraud. By taking a digital-first approach, grant makers can ensure checks and balances are in place to combat fraud at every stage. For example, ‘phoenixing’ is a problem that can be hard to spot manually. This is when company directors trade successively through a series of businesses that become insolvent in turn. The insolvent company’s business, but not its debts, is transferred to a new, similar ‘phoenix’ company.

With a digital grant solution, coupled with anti-fraud expertise, background checks can be completed automatically to ensure applications are genuine and to identify bogus activity. Artificialintelligence can reduce security risks and be used alongside data analytics to identify fraudulent activity. Digital data capture can encourage compliant responses and quickly validate them by integrating and comparing them with external sources of data. Intelligent automation enables more detailed due diligence by incorporating Know Your Business and Know Your Customer verifications to check against money laundering and confirm the legitimacy of businesses and individuals.

A digital grant management solution delivers greater efficiency, transparency and usability so that grants can be delivered at pace while ensuring all due diligence requirements are fulfilled to protect the public purse from fraud.

For example, a digital platform with built-in controls can prevent and reduce the risk of internal fraud, with:

• Automated sanction checking: a legal requirement for checking against any sanctions in place or for the misappropriation of funds
• Data access controls: different levels of users have different access controls to prevent manipulation of data for personal gain
• Audit controls: at payment stage grant administrators are checked by fraud specialists who are checked by team leaders and managers
• Audit logs: records are retained and checked across all users, including when they are accessed, added, edited or deleted
• Payment file reporting: auto-generated reports at payment stage are validated by an external department for accuracy
• Fraud/risk reporting: commonality and anomaly reporting is generated to alert as required • Invoice and bank verification checks: incorporated within the process to eliminate bank account manipulation
• Quality control: additional analysis is undertaken by fraud specialists to ensure processes are accurate and consistent.

The Government Functional Standards for grant-making states that all grants should be ‘subject to timely and proportionate due diligence and fraud risk assessment.’ This can place significant demands on teams, especially regarding compliance and reporting. Yet a digital solution for grant disbursement that aligns to these standards and includes anti-fraud capabilities greatly helps to reduce this burden and ensure better compliance.

Reimagining the customer (or citizen) experience is also vitally important as people need to be able to access financial support when they need it, without encountering barriers in their way. This is achieved through smart process design and user guidance in a digital solution without compromising on fraud protection and due diligence. By using a digital platform with optimised assessment workflows and processes, designed to highest accessibility standards, funders can administer grants with confidence and gain new data-led insight into their schemes’ outcomes.

Using grants to fuel the government’s levelling up agenda

Now that the coronavirus crisis in the UK is starting to slow, the government is turning its attention to its long-promised Levelling Up agenda. Grants will be a key part of this, with an initial £220m being allocated in 2021-22 to help local communities prepare for the introduction of the UK Shared Prosperity Fund. This fund will prioritise investments in:

• People - such as work-based training and employment programmes
• Communities and place – by investing in cultural and sporting facilities, infrastructure, and town centre and housing improvements
• Local businesses – through supporting innovation, technology, and greener projects.

These grants provide a key opportunity to ensure that the time is taken to protect people and the government from fraud, so the benefit of this investment gets to those who need it most. By digitising and automating the grant giving process, grant makers can reduce fraud, save money and create better outcomes for their communities.