USING COMPUTERIZATION OF SOCIAL SECURITY BUSINESS PROCEDURES TO COMBAT FRAUD, TACKLE ERRORS

Using Computerization to Combat Fraud To standardize is to guarantee in the time and the space to achieve a result in accordance with predefined specifications Standardization is a way to improve accuracy and efficiency Standardization of social security business procedures is a tool to combat fraud and tackle errors Standardization is applied internally, with other institutions, across borders.

Using Computerization to Combat Fraud - A review of common EU practices - • What is Fraud ? • Which remedies ? • European and selected countries’ approaches • By: • Jean - Victor Gruat USING COMPUTERIZATION OF SOCIAL SECURITY BUSINESS PROCEDURES TO COMBAT FRAUD, TACKLE ERRORS

Using Computerization to Combat Fraud The magnitude of fraud (or errors) and their influence over social security finances (including use of staff time to address consequences) is not to be underestimated The cost of fraud is not systematically documented in European social security – often wise explored only on the occasion of audits and reviews. Belgium estimate: Fraud represents yearly roughly 1% of medical insurance budget (1/3 of managerial fees). However (World Bank study, 2007) when data available, often rates of fraud and error between 2 and 5% of benefit amounts (superior to management fees) The Scope

Using Computerization to Combat Fraud Not all cases are the same – there is fraud, there is error; fraud or error attributable to client, or to staff The Typology Combating fraud, tackling errors free resources for better servicing the huge majority of decent clients

Using Computerization to Combat Fraud • A variety of situations may constitute social security fraud. • Examples include – USA: • Making false statements. • A person states as fact something untrue, such as claiming to be single when married or not working when employed. • Concealing a beneficiary's death or other facts. • A person doesn't tell the Social Security Administration (SSA) when a beneficiary dies and continues to cash the beneficiary's checks. • Misusing a beneficiary's funds. • A person or organization (e.g., nursing home) appointed by SSA to handle social security funds for an incapacitated beneficiary uses the money for personal expenses or continues to receive social security for a beneficiary no longer under his or her care. • * Identity theft. • A person uses the social security number of another person to obtain credit, loans, and other goods and services. • Buying, selling, or altering social security cards. • A person or organization illegally sells social security cards or impersonates an SSA official. What is social security fraud? COMMITTING FRAUD IS NOT LIMITED TO INSURED PERSONS – IN MOST CASES, MOST SERIOUS FRAUD COMES FROM EMPLOYERS

Using Computerization to Combat Fraud Actions commonly taken to combat fraud, tackle errors FRAUD Prevention ERROR Staff Results based management Information campaigns Prepayment investigations Clarify rights, tighten obligations Detection Gathering information from the public (tip-offs) Staff training Improving management structure System Data matching The Remedies Regular payment checks (controls) Risk-based assessment to organize reviews • IT improvements • reliability • comprehensiveness • uniqueness • self-detection Random and time-based reviews Inter-agency compliance activities Deterrence Increased sanctions and prosecutions Publicize fines and penalties

Using Computerization to Combat Fraud Corruption does not appear usually as a major cause for social security fraud in Europe • Reasons for this low incidence • Very precise eligibility criteria • Separation between assessment and payment • Protection of systems processing payments • High level of staff training, and high consideration to management • Investigators and reviewers not assigned cases where familiarity is suspected • Internal and external audits very active The Safeguards

Using Computerization to Combat Fraud The Human-Machine Twinning COMPUTERIZATION DOES NOT MAKE IT ALL “Neural networking” 人工神经网络is a highly valuable support to detect fraud and error Even without this level of sophistication, computer use for cross checking data, pointing to unlikely results, automatically retrieving missing information from database, etc. may achieve a great lot. COMPUTERS CANNOT DO IT ALL BY THEMSELVES, THOUGH. There is a need of human intervention to interpret and follow up on their output The physical inspection notably of enterprises remains extremely efficient, even more efficient with computer support.

Using Computerization to Combat Fraud The Collaboration Social security agencies should not work in isolation Different types of partnership: Partnership among social security agencies – share data concerning registration, basis for contribution, benefit awards … and detected fraud Partnership with other official bodies – information sharing, direct notification, access to data – tax authorities, private insurance, banking system, vital records, public security, etc. Partnership with enterprises to through automatic transmission of data minimize risk of errors, install safeguards, enable controls Partnership with other regions to better monitor migrant workers claims and records

Using Computerization to Combat Fraud European Approach Internationally, there are many common problems in social security fraud and error illegal working; document and identity fraud; weakness of internal controls. Agreement among all member countries on a format for safe and secure electronic transmission of data Adoption of a code of conduct for improved cooperation between authorities of the Member States concerning the “combating of transnational social security benefit and contribution fraud” and “undeclared work”, and concerning “the transnational hiring-out of workers”, Includes: direct communication between competent bodies; designation of national liaison offices in the Member States with a view to facilitating cooperation, and their notification to the other Member States and to the Commission; forwarding of any request for cooperation to the competent body of a Member State; reciprocal provision of administrative assistance between the competent bodies (supply of information, transmission of documents).

Using Computerization to Combat Fraud Country Example 1 Belgium A data warehouse – joint data system – created within the framework of anti-fraud project between inspection services of various social security institutions and employment service. Goal is to facilitate carrying inspection on the basis of indicators of potential fraud. Joint control brigades established on local basis corresponding to one legal district Targeting 4 sectors: Agriculture; Bars and Restaurants; Shops; Construction

Using Computerization to Combat Fraud Country Example 2 United Kingdom Four structures cooperate to fight against social security fraud: Benefit Fraud Inspectorate (central); Local Authority Investigation Officers Group; National Antifraud Network (exchange of data); Department for Work and Pensions Fraud Investigation team (undeclared work) Have online fraud reporting form and 24-hour fraud hotline number

Using Computerization to Combat Fraud Country Example 3 Bulgaria Under a MATRA Project (accession countries, financed by Government of the Netherlands) promotion of fraud prevention approach through a triangle Labour, Benefits and Inspection (data sharing; focus on undeclared work) Also a component to promote collaboration between social security agencies, the inspectorate, the police and the judiciary.

Using Computerization to Combat Fraud Country Example 4 France A national Committee and a National Delegation for Fraud Fighting (joint public body) were established grouping – tax authorities, - employment services - social security bodies Social security bodies may have direct access to third party information Working on automatic data crossing within each institution across institutions between institutions and other bodies Tougher penalties, with statutory minimum Under control of the National Committee on Computerization and Freedom

Using Computerization to Combat Fraud Country Example 5 Austria Austrian Employers Federation and Workers’ Union agreed that employers should be obliged to register workers with social security before commencement of work (special target: construction industry) Organized tax and social fraud is considered as criminal offence (imprisonment up to 5 years against employers)

Using Computerization to Combat Fraud Country Example 6 Germany Fraud fighting more focused on non declared work allegedly, 20% of those in receipt of unemployment benefits work undeclared Tools used are: Unemployed have hours were compulsorily at home to make control easier More frequent home controls Crossing tax and social security data Establishing a special inspection body (6.000 inspectors for 3.000.000 unemployed) Controlling bank situation of beneficiaries

Using Computerization to Combat Fraud Country Example 7 The Netherlands - Fight against undeclared employment - Private Banks have to supply the tax authorities with information on all savings accounts - Measures taken to legalize cash-at-hand part time work such as domestic workers - Trade Unions act as partners of the Government in controlling that employers comply with legislation, especially not hire undeclared workers

Using Computerization to Combat Fraud By Way of Conclusion FRAUD SHOULD NOT LEAD TO PARANOIA Systematic fighting against fraud should not run counter the fundamental objective to serve clients promptly, efficiently and accurately. Beyond fraud, clerical mistakes are also responsible for losses – and many clients make mistakes, without attempting to defraud the institution COMPUTERIZATION IS USEFUL TO NOT ONLY DETECT FRAUD, BUT ALSO HELP STAFF APPLY THE RULES – AND ALLOW FOR WORKERS AS WELL AS EMPLOYERS TO BETTER UNDERSTAND AND RESPECT THOSE SAME RULES.

Using Computerization to Combat Fraud Thank You !

USING COMPUTERIZATION OF SOCIAL SECURITY BUSINESS PROCEDURES TO COMBAT FRAUD, TACKLE ERRORS