Stopping fraud before it happens – interview with Veriff

For the last year, the finance industry has been facing major challenges and demands from consumers because of the COVID-19 pandemic. Can you please present some of these challenges?

The COVID-19 pandemic impacted virtually every industry through the course of 2020, with the finance industry facing major challenges and demands from consumers as a result. The global move to remote work and mandated lockdowns led to a significant rise in the adoption of digital solutions and online activity, with financial services organisations scrambling to implement digital solutions to stay afloat and meet increasing customer demands. This changed the way that many financial services organisations operate online, and unfortunately created more opportunities for scammers to increase their fraudulent activities in a more sophisticated fashion.

How have scammers adapted to this new environment?

This accelerated digitisation of financial institutions translated to an increase in fraud rates globally, with fintech fraud more than tripling as customers switched to online banking. In fact, Veriff’s 2020 Fraud Report found that over the course of 2020 the most prevalent type of fintech fraud was identity fraud (70%), followed by document fraud (23%), and pattern fraud (6%). When it comes to fintech identity fraud specifically, we saw a 7% identity fraud rate increase compared to the first half of 2020.

Scammers have been using a variety of digital fraud techniques, including creating ‘synthetic identities’, or fake identities using real information such as social security numbers. We’re also seeing a rise in the use of ‘deepfakes’ or synthetic media where an image or video of a person is replaced with the likeness of someone else.

COVID-driven acceleration of digital transformation has intensified the need for secure, reliable, and trusted digital identity. How can companies like Veriff address ‘digital first’ and ‘digital only’ needs for businesses?

With many organisations around the world moving their transactions online and as digital fraud rates continue to rise, it is now mission-critical for businesses to ensure their customers are who they are claiming to be, making identity verification solutions even more imperative in the fight against fraud. By leveraging the power of artificial intelligence (AI), companies like Veriff can analyse thousands of technological and behavioural variables in seconds. Veriff alone has the ability to verify people from 190+ countries.

Advances in artificial intelligence (AI) technology are also helping fraud detection tools to become faster and smarter. Every verification that is processed helps improve analytics and detection, and AI algorithms used to scan identity data can be constantly updated to stay ahead of fraudsters. The more fraud we catch, the better we become at protecting our partners.

We have also found that detecting fraud is most effective when cross-linking and combining different vectors and data points. It’s easier for scammers to fake one parameter, such as changing a photo on a document. But faking more than one parameter is more challenging and expensive for bad actors. Leveraging a combination of network, device, document, video, biometric and behavioural information helps to balance speed, accuracy, and fraud prevention in the verification and can help with accurate, real-time identification.

Veriff’s Fraud Report findings revealed a spike of fraud attempts in the crypto sector. What advice would you offer crypto exchanges on how to boost their KYC/AML strategies in 2021, to avoid fraud and penalties?

Know Your Customer (KYC) compliance laws will soon apply to many forms of crypto services, especially exchanges and wallet services that use fiat currencies. With the changing regulations, crypto and blockchain-powered companies need to implement identity verification technology to minimise any complications that can result from this transition.

Also, having real-time identity verification capabilities can be the difference between fraud detection (or detecting fraudulent behaviour after it occurs) and fraud prevention. This enables fraud to be stopped before it begins, saving money and time. For example, real-time facial biometrics adds an extra layer of security.

What will 2021 look like in terms of fraud and the fight against it?

In 2021 more businesses will continue to go digital, thus we will see fraud continuing to rise and the growing need for businesses to implement secure and reliable identity verification technology. While AI will continue to help companies fight fraud, on the flip side the rise of different AI solutions will also make it harder for organisations to separate between real or (deep) fakes without having the right technology involved. Over the next year, as businesses and consumers work to navigate their ‘new normals’, as the world begins to reopen, trust must be built and nurtured, and this can’t be possible without a fast, accurate, and secure identity verification process.

This editorial was first published in our Financial Crime and Fraud Report 2021 - How to Fight Fraud and Master KYC, Onboarding & Digital ID, which provides a comprehensive overview of the major trends driving growth in fraud prevention, identity management, digital onboarding and KYC, transaction monitoring, financial crime compliance, regtech, and more.

About Janer Gorohhov

Janer leads Veriff’s product and innovation to ensure that our verification engine is a trend-setter and outperforms every other solution on the market. He is a tech-savvy innovation enthusiast who started his career as a full-stack developer. Before Veriff, he worked in project management, as well as fundraising and finance.

About Veriff

Veriff is a global online identity verification company that enables organisations to build trust with their customers through accurate and automated online IDV. Veriff’s intelligent decision engine can analyse thousands of technological and behavioural variables in seconds, matching people to more than 9,000 government-issued IDs from over 190 countries.