From pay-and-chase to prevention-by-design: How government can tackle fraud

Public sector fraud is no longer the work of opportunists exploiting loopholes. It is industrialised, data-driven and increasingly powered by artificial intelligence, according to Synectics Solutions CEO, Rich Wood.

“Almost every interaction between a citizen and the state relies on trust,” said Wood. “But today that trust is being exploited by AI-driven networks operating with corporate efficiency.”

He points out that many departments still rely on a ‘pay-first, check-later’ approach, particularly where service speed is critical. But Wood argues this reactive model cannot keep pace with organised crime.

“In a digital economy, once funds move, they are effectively gone forever. Chasing losses after the fact is a race government is statistically unlikely to win,” he said.

A system designed around post-payment recovery inevitably introduces friction into frontline services. To mitigate risk, departments layer in checks, delays and manual reviews that often fall hardest on legitimate applicants.

“The real risk isn’t just financial – it’s trust. When systems are slow and suspicious, it’s the honest majority who pay the price,” said Wood.

Instead, he advocates a shift to “prevention-by-design”: embedding risk controls at the start of digital journeys so fraudulent applications are intercepted before funds leave the building, while low-risk users move through without any problems.

Breaking down the data-sharing myth

Wood dismisses the common belief that data governance rules, particularly GDPR, prevent meaningful data sharing as a misconception.

Frameworks such as the Public Authorities (Fraud, Error and Recovery) Act 2025 already provide lawful gateways for proportionate data sharing to prevent fraud. Emerging Smart Data schemes are designed to facilitate secure, controlled information flows.

“The hesitation usually comes from a lack of confidence, not a lack of law. Governance should be seen as an enabler of action, not a brake,” he said.

Learning from financial services

UK banks prevent around £1.45 billion in fraud annually through collective intelligence and real-time risk analytics. By contrast, government departments saved £480 million between 2024 and 2025.

Banks and insurers can decline customers outright; government cannot. The state has a duty of care to support everyone eligible. But Wood believes the core lesson still applies: collective intelligence works.

“When one organisation is hit by a new tactic, the whole network gets smarter. That’s what real-time data exchange enables,” he said.

Crucially, fraud patterns rarely originate in the public sector. Organised activity is often visible in banking, telecoms or utilities long before a fraudulent government application is filed. Without access to those signals, departments are operating with partial sight.

Real-time risk intelligence closes that gap, said Wood. By distinguishing between low-risk citizens and known threat actors at the point of application, departments can focus investigative resources where they matter most.

Synectics Solutions operates one of the UK’s largest risk data-sharing networks, bringing together information from more than 160 organisations across financial services and the public sector. Its intelligence platform aggregates data on known and suspected fraud activity, allowing organisations to identify high-risk applications in real time.

Designing for trust

Wood notes that when a system is slow and suspicious, it’s the honest people who pay the price.

“Because we’re so worried about missing a fraudster, we end up putting students, pensioners, and small businesses through unnecessary hurdles,” he said.

“By identifying high-risk individuals instantly, we can wave through the honest majority, processing applications more quickly and with confidence. When the system works efficiently for the law-abiding majority and effectively blocks threat actors, it reinforces the integrity of public services and ensures that support reaches those who truly need it.”

If advising a department today, Wood said the immediate priority is to shift from a reactive stance to a ‘prevention-by-design’ strategy.

“First, reframe fraud from a debt-recovery problem to a connectivity challenge. Second, embed real-time data checks at the start of application processes. Third, make full use of existing legal gateways to share intelligence with trusted private-sector partners.

“I hope the upcoming UK Fraud Strategy helps to close these connectivity gaps and help departments utilise the legal frameworks and trusted technologies to combat fraud head on,” he added.