With frauds and scams becoming more sophisticated in the age of AI, Ofer Friedman from AU10TIX reveals how to use tech to detect and prevent document forgery.
Digital innovation is driving the financial world, but an insidious threat is on the rise, threatening the sector’s rapid advancement: document forgery. This fraudulent activity is becoming more and more sophisticated at a rapid rate, with professional fraudsters utilising advanced technologies like deepfakes and AI-generated documents.
The consequences for financial institutions are significant, affecting operational integrity, compliance, and overall security. In 2023, USD 12.3 billion in losses were reported due to deepfake scams, and this number is expected to grow to USD 40 billion by the end of 2027, according to Deloitte. It’s never been more important to explore and understand the nature of document forgery and fraud, and to take the necessary measures to combat the growing problem.
Document forgery involves creating or altering documents to deceive others for financial gain. In the financial services industry, where transactions often rely heavily on document verification, the stakes are particularly high. FIs are prime targets due to the high volume of transactions and the sensitive nature of the information they handle. As the sector has grown more reliant on digital documents for remote banking and online services, the risk of document forgery has surged.
AI-generated documents and deepfakes further exacerbate this problem. Fraudsters now use advanced technologies to produce documents that can closely mimic genuine ones, such as identification cards and financial records. Unlike traditional fraud methods, which might involve simple alterations or falsifications, these new techniques involve complex processes that are much harder to detect.
For example, deepfake technology allows criminals to create visual and audio content so convincing that they easily bypass security checks and provide unauthorised access to financial services. The use of AI in generating fake documents adds another layer of complexity, making it difficult for conventional verification systems to keep up.
This evolution from traditional fraud to professional-grade forgeries reflects a broader trend of fraudsters leveraging state-of-the-art technology to exploit vulnerabilities in financial systems. The result is a more complex problem for institutions, which must now contend with increasingly sophisticated methods that traditional fraud detection mechanisms struggle to address. Recognising this shift is essential for developing effective strategies to combat document forgery and safeguard the integrity of financial services.
The prevalence of document forgery in the financial services sector is alarming. According to Inscribe Fraud Detect, the availability of fraud-as-a-service has surged, with unique fake document templates increasing by nearly 20% in the past year. This service makes it easier for even non-professional criminals to engage in document forgery. Banks, traders, and other parties have lost at least USD 9 billion through falsified documents in the commodities industry alone over the past decade, according to data compiled by Bloomberg.
The impact of document forgery is multifaceted. Financial institutions obviously incur significant costs due to forgery-related fraud, not only in terms of financial losses but also in the resources required to prevent and address such issues. However, compliance challenges are another critical concern. FIs must comply with regulations like the General Data Protection Regulation (GDPR) and Anti-Money Laundering (AML) directives. Failure to meet these requirements can result in hefty fines and reputational damage. Staying abreast of regulatory changes and ensuring that fraud detection measures are up to standard is essential for maintaining compliance and protecting the institution's reputation.
The high volumes of document forgery even impact operations, as FIs must implement extensive verification processes that delay transactions and increase the workload for compliance and fraud prevention teams.
To combat the growing threat, FIs must adopt advanced technologies and methods. One effective approach is the use of anomaly detection systems, which can identify unusual patterns in user behaviour. These systems, powered by AI algorithms, provide real-time document verification and are particularly useful in detecting deepfakes and other sophisticated forgeries.
The integration of biometric authentication and digital identity verification can further enhance security. For example, a workflow for automated document verification might include document submission, AI analysis, biometric verification, anomaly detection, and final approval. This comprehensive approach ensures that every step of the verification process is robust and secure.
Anomaly detection systems offer several benefits. They can identify unusual patterns that traditional systems might miss, such as multiple login attempts from different locations within a short time frame or unusual purchasing patterns from new accounts. These systems are also scalable and adaptable, continuously learning and adapting to new fraud tactics. This adaptability is crucial, as fraudsters constantly evolve their methods to bypass security measures.
By adopting anomaly detection systems and other advanced technologies, financial institutions can gain a competitive advantage. These tools not only increase operational efficiency and security but also enhance customer trust and retention. Customers are more likely to remain loyal to institutions that prioritise their security and protect their personal information.
The rise of document forgery in the financial services sector is a pressing issue that demands attention. As fraudsters continue to employ sophisticated new methods, FIs must stay ahead of the curve by adopting advanced detection and verification technologies. By doing so, they can protect themselves from operational disruptions, financial losses, and compliance challenges, while also safeguarding their reputation and customer trust. The fight against document forgery is ongoing, and only through continuous innovation and vigilance can financial institutions ensure their security and integrity.
About Ofer Friedman
Ofer Friedman is the chief business development officer for AU10TIX, the global technology leader in identity verification and ID management automation. He has 15 years of experience in the identity verification and compliance technology sector and has worked with household names such as PayPal, Google, Payoneer, Binance, eToro, Uber, Rapyd, and Saxo Bank. Ofer began his career in advertising/marketing, working for the BBDO and Leo Burnett agencies. Connect with him on LinkedIn.
About AU10TIX
AU10TIX is the global leader in identity verification and management, protecting the world’s largest brands against advanced fraud. The company’s future-proof product portfolio helps businesses provide frictionless customer onboarding and verification in 4-8 seconds while staying ahead of emerging threats and evolving regulatory requirements. Connect with AU10TIX on LinkedIn and on X. For more information, visit AU10TIX.com.
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