What’s the worst that can happen?

If the name and address data you keep on your customers is not accurate, what’s the worst thing that could happen to you? The odd missed sales opportunity? A little duplication of effort from your sales team? Nothing you couldn’t live with, right?

If you start to think of inaccuracies as loopholes which criminals could potentially exploit to defraud you, then the picture changes somewhat. It changes yet again in the light of recent legislation that further raises the bar of responsibility for those who hold customer data.

This year, a number of big names in the financial services sector have learned the hard way that inadequate procedures for gathering and holding customer data can come with a very high price tag. Acting under the authority of new anti money laundering legislation, the Financial Services Authority imposed fines earlier this year of £1.25m and £2.3m on two well known high street banks for failing to spot the kind of data loopholes that organised criminals habitually target to process ill gotten gains. And earlier this month, another big name, which clearly had not learned from the example of the first two, was similarly punished by the FSA. The fines, naturally, did not hurt these organisations as much as the loss of credibility and confidence the ensuing publicity brought about.

It certainly isn’t just financial services companies with their necks on the line. High street retailers and mobile phone providers are also favorite targets for both small time crooks and more powerful forces in the criminal underworld. And both national and local government face huge challenges from those seeking weaknesses in their databases to apply fraudulently for benefit, or worse, create false identities with terrorism in mind.

So what’s the answer? A clear cut policy on data designed to ensure that inconsistencies and inaccuracies are less easily overlooked is a start. But of course all banks have a policy on money laundering. It’s no good having a policy if it’s not back by systems designed to be able to pick up suspicious transactions. Prevention always being preferable to cure, it’s equally if not more important not to give fraudsters a foot in the door in the first place. If your control over customer data is such that inconsistencies, duplications, and the proliferation of different styles of data are all but eradicated, then you present criminals with a sheer wall with fewer footholds.

You also have the task of educating and training customer facing staff so that they are on the lookout for illegitimate customer activity. Their alertness, combined with the twin safeguards of policy and systems, will at the very least force the fraudulent to look elsewhere. It will certainly help safeguard you against the embarrassment of prosecution.