Across Europe, fraud isn’t just growing – it’s getting more sophisticated. Amid the COVID-19 pandemic, we only saw instances of fraud grow, hitting record highs as fraudsters preyed on the vulnerable. What’s more, as technology advances, fraudsters keep adding new weapons to their arsenal. The latest in a long list is synthetic identity fraud. It’s the fastest-growing type of financial crime in the US, and it looks set to hit Europe with the same force any day now.
This type of fraud sees bad actors use ‘synthetic’ identities to open new bank accounts. These are either completely fake, or a unique amalgamation of stolen, false, or modified personal identifying information (PII) – because of this, it can go undetected for much longer than traditional identity fraud. Compounding the problem is the fact that these identities can ‘pass’ as legitimate during the onboarding stage. Traditional anti-fraud measures can’t keep up.
How can we combat fraud as it grows in sophistication? Get more sophisticated in how we fight it. Since those using synthetic identities choose to ‘play it safe’ online in order to fly under the radar, behavioural modelling can’t spot what’s legitimate and what’s a fraud. To stop bad actors from committing serious financial crimes – from building up excellent credit and then leaving huge debts, to being part of huge money-laundering schemes – banks and fintechs need to turn to the technologies that can stop synthetic identities in their tracks. Enter biometrics.
Some forward-thinking financial institutions are already using biometrics to verify identities in the onboarding process. Customers can take a selfie and a picture of their ID and be signed up to a bank or service within minutes, thanks to AI and machine learning that check for ‘liveness’, assess for any forgery and compare the selfie with the ID picture. Meanwhile, the bank can comply with stringent AML and KYC regulations, and welcome a new satisfied customer in one fell digital swoop.
There’s another reason why biometrics, and particularly the selfie, are critical to fighting fraud: who wants to commit fraud using a picture of their own face?
To take the fight against synthetic identity fraud one step further, and protect against the threat of deepfakes too, banks will need to ensure they’re using multiple data points – a ‘toolbox’ of sorts – to keep fraudsters out. A multi-layered approach is critical for a robust anti-fraud system. Alongside physical biometrics and liveness detection, this could include link analysis, that checks for overlaps in PII, as well as agent-assisted solutions that use human experts as a second line of defence.
We can’t expect fraudsters to stop looking for new ways to slip through the cracks – so why should customers expect banks to stop looking for new ways to keep them out? With technologies like biometrics on hand to ease the burden and keep customers and their data safe and secure, all the banks have to do is innovate.
