Steven Philippsohn welcomes the Identity Card Bill, arguing that it is timely legislation in an age of identity fraud and cyber crime

Identity fraud is an increasing problem in the UK - it costs a total of £1.3 billion a year, and it takes an average victim 18 months to realise he has been targeted and 400 hours to repair the damage caused. In 2003, 100,000 citizens were victims in the UK, a figure that is growing by 30% each year.


As a result of increasing concerns with regard to identity fraud, terrorism and asylum issues, the government recently introduced the Identity Cards Bill, which creates a compulsory national identity card scheme together with a national identity register. The government proposes that the card should include biometric scans of the iris or a fingerprint. These cards, in theory, should permit the accurate identification of the holder.


The advantages are numerous and obvious. Banks, insurers and other financial institutions should be able to authenticate a person's identity with accuracy, making it difficult for fraudsters to take out loans or create bank accounts under a false name. Solicitors and accountants could accurately identify their clients, thereby reducing money laundering.


Perhaps the biggest beneficiary would be the government. Not only will agencies be able to verify the identity of those seeking medical treatment and benefits, but information stored would also allow those agencies to share data more effectively. The scheme is backed by law enforcement agencies.


Many countries have routinely used identity cards over the years. In fact, within the EU, only the UK, Ireland, Denmark and Latvia do not.


The difficulty the government faces is that the Bill is a form of enabling legislation. It does not provide any details about how the scheme will work, which is why there are so many objections. For example, how can a national register operate securely?


In the US, databases containing large amounts of personal data have been subject to repeated hacker attacks in an attempt to obtain personal information and steal identities. A national identity register created in this country would surely prove an attractive target to hackers, criminals and fraudulent employees who are able to provide access to the database in return for financial reward.


Research has shown that scanners can be fooled by artificial fingerprints or contact lenses. The nightmare scenario is that of the technologically advanced fraudster who obtains someone's biometric data and can impersonate that person. This may make it even more difficult to repair the damage caused and apprehend the fraudster.


Identity cards alone will not help victims of fraud to recover their losses. There will always be recourse to civil proceedings as a means of recovering stolen assets, using court orders to trace stolen assets through bank accounts and even into assets purchased using the stolen money. If the criminals can be identified, it is possible to freeze their assets and require them to disclose details of any further assets.


Supporters of the Bill do not pretend that it will prevent all fraud or identity crime. They simply argue that a well-managed and operated identity card scheme will make it significantly more difficult for people to commit it.


Therefore, in principle identity cards should perhaps be welcomed. However, there are practical obstacles that still need to be overcome if any future scheme can be introduced successfully in the UK.


Steven Philippsohn is senior partner and head of fraud litigation at City-based law firm Philippsohn Crawfords Berwald. He was a member of the Home Office research panel that recently produced a report on technology crime