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There has been a 5 Billion Euro VAT fraud across Europe in trading with CO2 quotas. I repeat 5 Billion Euros. The Danish CO2 register has been an important part of the trading carousel. The fraud is done by selling quotas across borders, and claiming and not claiming VAT, and letting companies goes bankrupt.
Why did the Danish CO2 register become so important in the fraud?
When companies have registered, the registry has not checked if the information is correct concerning address, phone number , e-mail etc. A result is the example of Alim Karakas, who is registered with the Non existing address” Studsgade 1 in Copenhagen” in both the Danish and French registry. Another example is Avni Hysenaj, who is registered in the Non existing address Engelbolden 26 in Hvidovre. The source of this information is the Danish paper, Ekstrabladet, that broke the story.
In addition companies with prior fraud convictions, and companies which the Danish state has decided to be terminated for missing VAT filings and other irregular actions, have been accepted as quota traders.
The spokesperson of the Danish Registry, tells to Ekstrabladet: ”– We do not have the possibility to check the addresses given to us”. This is quite amazing. She must believe that the only way to check the information, is that you manually have to check each entry.
How could this be detected?
The registry could set up a Data Quality Firewall. It could automatically check every registrar against reference data available in Denmark. This is not difficult, nor expensive. You would get a red flag when the address did not exist, or if the company was not registered to the given address.
If the law would allow it, you could also check for previous fraud, or if the government had put it up for termination.
Check for Terrorism Funding?
In addition I would have checked against the “Consolidated list of persons, groups and entities subject to EU financial sanctions”. In a scam this big, there might be some terrorists looking for a way to fund their operations. To check against the EU Sanction list is again not difficult, nor expensive.
As EU writes “The correct application of financial sanctions is crucial in order to meet the objectives of the Common Foreign and Security Policy and especially to help prevent the financing of terrorism. The application of financial sanctions constitutes an obligation for both the public and private sector”
In addition I would set up the usual Fraud Detection to look for deviant spellings of names, addresses and for “Non Real Life Subjects”.
I do not say the fraud would be avoided, but maybe it would not amount to staggering 5 Billion Euro.