fraud prevention

Deepfake fraud up 2000%, urging urgent action for enhanced fraud prevention in financial sectors, with incidents rising by an astounding 2137% over the last three years, as highlighted in Signicat’s “The Battle Against AI-Driven Identity Fraud” report. As deepfake technology evolves, businesses across industries must reassess their security measures to counter one of the most severe threats in today’s digital world.

In a survey of over 1200 financial and payment professionals from seven European nations, including the UK, it was revealed that account takeovers are now the most prevalent type of fraud affecting their customers. This is followed by card payment fraud and phishing attacks.

The study is the first of its kind to focus specifically on AI-driven identity fraud. It underscores how deepfake technology has become a prominent form of fraud in the financial sector, utilizing artificial intelligence to craft convincingly realistic digital fabrications. As the use of deepfakes continues to rise, the urgency to enhance fraud prevention strategies has never been more critical.

Deepfake Fraud: Presentation vs. Injection Attacks

The evolving deepfake technology has enabled two main types of attacks:

1. Presentation Attacks: include fraudsters wearing masks and makeup to spoof another person, but also where the camera films another screen showing a deepfake in real-time, targeting activities such as account takeovers or fraudulent loan applications.
2. Injection attacks: In these cases, malware or untrusted input is deliberately inserted into a program, compromising its integrity or functionality for example as pre-recorded videos, often during onboarding or KYC processes that banks, fintech companies, or telecommunications companies are subjected to.

As these techniques become more sophisticated, traditional fraud detection systems may struggle to handle this evolving threat.

Deepfakes: A Growing Concern in Financial Fraud

According to Signicat’s report, 42.5% of fraud attempts detected in the financial sector are now due to AI. Three years ago, deepfakes were not even in the top three most common types of digital identity fraud, and today it is the most common type of digital identity fraud faced by companies. These forgeries have become more widespread and harder to identify, which has contributed to their rise as one of the main methods of identity fraud.

Delay in fraud detection tools as threats increase

Despite the increase in AI-driven fraud attempts, including deepfakes, only 22% of financial institutions have implemented AI-based fraud prevention tools. This gap leaves many companies vulnerable to more sophisticated attacks.

“Three years ago, deepfake attacks were only 0.1% of all fraud attempts we detected, but today, they represent around 6.5%, or 1 in 15 cases. This represents an increase of 2137% in the last three years, which is alarming. Fraudsters are using AI-based techniques that traditional systems can no longer fully detect. Organisations should consider advanced detection systems that combine AI, biometrics and identity verification to protect against these threats,’ says Pinar Alpay, Chief Product & Marketing Officer at Signicat. “A multiple detection setup is crucial. By combining early risk assessment, robust identity verification and authentication methods based on facial biometrics, and ongoing monitoring, companies can better protect both their operations and their customers,” she adds. “Orchestration of these tools in the optimal combination is the essence of a multi-layered protection”.

The steep rise in deepfake fraud is part of a broader trend of AI-driven identity fraud, as cybercriminals increasingly leverage advanced technologies to exploit financial systems. Signicat’s report makes an urgent call to action for financial institutions and businesses alike to proactively strengthen their cybersecurity measures.

By updating fraud detection systems, improving employee and customer awareness, and investing in AI-based fraud prevention solutions, organisations can stay ahead of these rapidly evolving threats and protect both their operations and their customers.

iDenfy, a global leader in identity verification, compliance, and fraud prevention, has joined Circle’s Alliance Program, a global network of organizations dedicated to driving innovation in the financial sector. Through this collaboration, iDenfy will provide its advanced identity verification, anti-money laundering (AML), and Know Your Business (KYB) solutions to Circle’s network of industry leaders. This will enable businesses to streamline compliance, reduce fraud risks, and leverage new opportunities in the evolving digital financial landscape.

Circle, a financial technology firm known for issuing the USD Coin (USDC), is focused on building an open, inclusive, and efficient financial ecosystem. Its Alliance Program unites businesses and innovators to accelerate the adoption of blockchain-based financial solutions and promote financial inclusion worldwide.

By joining this initiative, iDenfy strengthens its mission to enhance security, trust, and efficiency in digital finance, supporting businesses in navigating the complexities of compliance and fraud prevention.

As part of the program, iDenfy will engage with industry veterans, explore emerging trends, and connect with leading organizations to drive mutual brand awareness and business growth. The partnership allows iDenfy to present its solutions to Circle’s global ecosystem, helping businesses protect against money laundering, fraud, and other financial crimes.

iDenfy brings to the table a comprehensive suite of compliance tools, including support for over 3,000 identified documents from 200 countries and territories. The company’s all-in-one platform offers not only identity verification with the latest face recognition algorithms to ensure that the faces analyzed are real and prevent the use of fakes or tricks during the verification process, but also business verification with access to official credit bureaus, direct integration for politically exposed persons (PEPs), sanctions, and adverse media checks, together with ongoing screening and audit-ready reports.

In addition, iDenfy’s pay-per-approval pricing model ensures cost efficiency by charging only for verified customers and eliminating fees for denied verifications. This approach sets the company apart from competitors, who typically charge for all verification attempts, regardless of the outcome.

Circle’s Alliance Program provides a unique platform for members to explore industry trends, engage with innovators, and expand their networks. Through this collaboration, iDenfy will have the opportunity to showcase its expertise in identity verification and fraud prevention, helping businesses in the Circle ecosystem stay ahead of regulatory requirements and emerging threats.

“We are thrilled to join Circle’s Alliance Program and contribute to their mission of fostering financial inclusion and innovation on a global scale. Our identity verification and fraud prevention solutions are designed to help businesses navigate the complexities of compliance while delivering a seamless user experience,” said Domantas Ciulde, CEO of iDenfy.

With over 600 customers worldwide, including the Bank of Lithuania, iDenfy has established itself as a trusted partner for businesses seeking robust compliance solutions. The company’s AI-powered platform combines advanced technology with user-friendly features, enabling businesses to verify identities, screen for risks, and generate compliance reports with ease. The partnership aim to address the challenges of financial crime, enhance trust in digital transactions, and support the global adoption of secure and inclusive financial systems.

‘’It is a privilege to welcome iDenfy to the Circle Alliance Program. Their expertise in identity verification and fraud prevention aligns with our commitment to building a secure and inclusive financial ecosystem. By bringing iDenfy’s solutions to our network, we can help businesses protect against financial crimes while driving innovation and growth,” said Jeremy Allaire, Co-Founder and CEO of Circle. 

“In today’s fast-paced world, businesses need reliable tools to combat fraud and ensure compliance without compromising user experience. Our collaboration with Circle’s Alliance Program allows us to reach a broader audience and make a meaningful impact on financial security, ” added Domantas Ciulde, CEO of iDenfy.