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banking crime

AI now the key tool for amateurs committing financial crime

Nearly 70% of the 600 fraud-management, anti-money laundering, and risk and compliance officials surveyed in BioCatch’s first-ever AI-focused fraud and financial crime report say criminals are more adept at using artificial intelligence to commit financial crime than banks are at using the technology to stop it. Equally concerning, around half of those same fraud-fighters report an increase in financial crime activity in the last year, and/or expect to see financial crime activity increase in 2024.

The report depicts a troubling and burgeoning trend in which criminals with minimal technical expertise or financial crime skillset are using this new technology to improve the quality, reach, and success of their digital-banking scams and financial crime schemes.

“Artificial intelligence can supercharge every scam on the planet,” BioCatch Director of Global FraudIntelligence Tom Peacock said, “flawlessly localizing the language, slang, and proper nouns used and personalizing for every individual victim the scam type, images, audio, and/or video involved. AI gives us scams without borders and will require financial institutions to adopt new strategies and technologies to protect their customers.”

A staggering 91% of respondents report their organization is now rethinking the use of voice-verification for big customers due to AI’s voice-cloning abilities. More than 70% of those surveyed say their company identified the use of synthetic identities while onboarding new clients last year.  The Federal Reserve believes traditional fraud models fail to flag as many as 95% of synthetic identities used to apply for new accounts. It regards synthetic identity fraud as the fastest-growing type of financial crime in the U.S., costing companies billions of dollars every year.

“We can no longer trust our eyes and ears to verify digital identities,” BioCatch CMO Jonathan Daley said. “The AI era requires new senses for authentication. Our customers have proven behavioural intent signals are those new senses, allowing financial institutions to sniff out deepfakes and voice-clones in real time to keep people’s hard-earned money safe.”

Other Key Survey Findings:

  • AI (Already) an Expensive Threat: More than half of the organizations represented in the survey say they lost between $5 and $25 million to AI-powered attacks in 2023.
  • Financial Institutions Also Using AI: Nearly 3/4 of those surveyed say their employer used AI to detect fraud and/or financial crime, while 87% say AI has increased the speed with which their organization responds to potential threats.
  • We Need to Talk: More than 40% of respondents say their company handled fraud and financial crime in separate departments that did not collaborate. Nearly 90% of those surveyed say financial institutions and government authorities need to share more information to combat fraud and financial crime.
  • AI to Help with Intelligence-Sharing: Nearly every respondent says they anticipate leveraging AI in the next 12 months to promote information-sharing about high-risk individuals across different banks.

“Today’s fraudsters are organized and savvy,” BioCatch CEO Gadi Mazor said. “They collaborate and share information instantly. Fraud fighters – including technology-solution providers like us, along with banks, regulators, and law enforcement – must do the same if we expect to reverse the growing fraud numbers across the globe. We believe our recent partnership with The Knoble will advance this discussion and remove the perceived barriers to better, more meaningful collaboration and fraud-prevention.”