Why is ID so important?

What identity allows

A person's identity (and their ability to prove it) is central to almost all commercial activity. Organisations need to verify an identity before opening an account or issuing goods or services.

They need to ensure that:

• The person applying for credit is who they say they are and lives where they claim to live.
• The person's name and address and other details are correct.

In the UK, there is not yet a single document used nationally to prove identity. At the moment, to verify an identity, organisations use various pieces of information, including personal details such as your name, date of birth, address, mother's maiden name etc. This is in addition to a mosaic of documents and records, including passports, driving licences, birth or marriage certificates, utility bills, bank statements, payslips, educational qualifications, etc.

Stealing an identity

Your personal details and the various documents and records make you the individual person you are. Your unique identity features - your fingerprints, DNA and physical appearance - can't easily be adopted by someone else, but your other identity details and documents can.

So if fraudsters get access to enough information about you, they may be able to impersonate you and steal your identity. They could either open a new account or obtain new credit cards or loans using your identity, or 'take over' your own existing accounts by impersonating you and changing the address of your account.

The procedures used by organisations to check the information supplied by customers helps detect and prevent most identity fraud. However, some fraudulent applications are accepted due to the sophisticated techniques used by the fraudsters.

What could be done with my stolen identity?

Fraudsters are financial criminals. They are unlikely to use their own identity for their criminal activity. They will either create a new false identity, or, more commonly, will attempt to pose as someone else - someone with a clean identity, a good financial history and a reputation of settling their accounts on time.

There is no definitive profile of an identity fraudster - it could be a one-off small time crook working alone, or a large network of criminals using the proceeds to fund organised crime.
There are various reasons why a fraudster might want to steal an identity. Generally, it is:

• To hide their real identity for financial benefit.
• To obtain various financial benefits; bank accounts, credit cards, loans and mortgages, goods or services which they have no intention of repaying.
• To claim benefits they are not entitled to or to avoid paying tax.

They may also need a new identity to:

• Hide a poor financial history and avoid paying existing debts.
• Continue various criminal activities without attracting Police attention.
• Drive despite being disqualified.
• Work with children.
• Remarry and commit bigamy.

As well as small-time crooks working alone, criminal networks commit identity fraud on a large scale by using multiple identities. It is estimated that this fraud is responsible for a criminal cashflow of around £10m per day.

This money is then used by criminals to finance bigger scams.

A significant proportion of identity fraud is therefore closely linked with other crimes, such as human trafficking, illegal immigration, drug running, terrorism and money-laundering.

How is identity fraud linked to money laundering?

Criminals need to launder, or 'clean' the proceeds of their crimes - they want to get 'dirty' money into the financial system. A criminal's funds need to look as if they originate from a legitimate source, and the criminal needs to operate without being caught or arousing suspicion.

Criminals therefore need financial products, services or accounts. They are unlikely to use their own identity, as this would leave a trail back to them. This is why, under Money Laundering Regulations, financial services firms must check to ensure they 'know their customer' before opening an account or providing a service.

Source : http://www.cifas.org.uk/default.asp?edit_id=561-56