Financial crime is a billion-dollar industry.
As cyber criminals increasingly use technology-driven methods to intensify their attacks, artificial intelligence (AI)-developed deepfakes are being used to successfully bypass the know your customer (KYC) verification procedures used by financial institutions.
This was the word from Amritha Reddy, senior director of product at TransUnion, discussing financial crime trends at this week’s Southern African Fraud Prevention Service (SAFPS) International Fraud Summit.
According to Reddy, the rise of technology has emboldened criminal syndicates, leading to a significant increase in global fraud. South Africa, being one of the most targeted countries, faces daily challenges, with high levels of fraud, making it a critical player in this landscape.
AI, she noted, is increasingly being employed as a tool for crime, and is being used by fraudsters to create fake identities, in order to open bank, credit card, crypto-currency and other financial accounts.
“Artificial intelligence is not just in our hands; it’s also in the hands of cyber syndicates building fraud-as-a-service empires. Deepfakes can pass KYC verification processes through synthetic identities and are opening real bank accounts, while cyber defences are playing catch up.
“If we keep relying on yesterday’s controls to stop tomorrow’schallenges, this means we are not managing risks but we are manufacturingvulnerability,” Reddy commented.
Financial crime has become a billion-dollar industry that is scaling faster than most legitimate businesses today, she added.
Referencing PwC and SAFPS research reports, she noted global fraud losses are estimated at $485 billion, and 45% of those crimes are cyber-enabled crimes which exceed over $5 billion annually.
Direct and indirect losses to fraud, when combined, are over $5 trillion annually, she stated. “Costs relating to financial crime are absolutely astronomical.”
The real question is not whether we are prepared, it is whether we are bold enough to disrupt ourselves so that criminals don’t do it first, Reddy warned.
Also speaking at the event, Roy Retief, head of operations at SAFPS, highlighted a key trend in the increase in cyber crime incidents in SA, according to the 2024 SAFPS annual report.
According to the report, which includes SAFPS fraud data from 2024, total active fraud listings increased by 26%, and total active victim of impersonation listings increased by 12%, compared to the previous 12-month period (January 2023 to December 2023).
Despite a 4% decrease in forged documents from 2023, they still constitute a significant portion of fraudulent activities reported to SAFPS, he noted.
“These statistics indicate the tough economic climate facing consumers. Credit providers are encountering increased risks when verifying documents and providing credit to legitimate applicants.
“The growth of fraud globally and locally is very concerning. Law enforcement officials face an uphill battle in addressing this risk landscape. These scams include phishing, investment, romance and advance fee scams. Consumers are approached through [various] channels − including WhatsApp, e-mail and SMS − making it difficult to identify the individuals and organisations.”
Retief added that forged documents are often used to inflate a consumer’s reported income, enabling them to pass affordability checks for higher credit limits.
