2023 was an exceptionally disruptive period for fraud typologies and technologies. As the year draws to a close, our Fraud Consultants analysed National SIRA data to understand how shifting behaviours impacted the syndicate – and made several compelling findings.
- Identity Fraud widened its lead over other fraud typologies [Skip ahead]
- Identity Fraud infiltrated more Finance products [Skip ahead]
- Misuse of Facility continued to decline, but may be misleading [Skip ahead]
- Opportunistic frauds are increasingly driven by the cost of living crisis [Skip ahead]
1. Identity Fraud widened its significant lead.
Identity Fraud is here to stay and during the past twelve months, remained the primary Finance reason for filing (RFF) recorded in our National SIRA fraud data syndicate - although 2021's near-vertical spike has since levelled off.
Identity Fraud is an organised, third-party typology. It, therefore, makes sense that in 2023, almost all organised categorisation in Finance is associated with it – with "False ID" being the most used RFF in National SIRA.
Organised criminals have always been drawn to Identity Fraud. If IDs are successfully falsified, perpetrators can gain access to an extensive list of services, which can be defrauded for financial gain time and again.
There are various reasons behind Identity Fraud's growing prevalence in the last year, such as the increased use of ID verification and easier access to image manipulation tools.
Diagram 1. The top three fraud typologies within Finance in National SIRA.
2. Identity Fraud grew where it was once barely detected.
In 2023, organised crime appeared to target a wider range of Finance products using fabricated IDs, in addition to growing in volume.
This is significant because a little over four years ago, False Identity" represented a tiny proportion of RFF’s recorded in National SIRA for many products. Today, however, this organised crime typology has infiltrated the full scope of Finance products, often being a top three RFF.
That Identity Fraud is infiltrating a wider range of financial service products should serve as a call to action. Its growth is indicative of accessibility. And we believe that once fraud crosses that boundary, severe challenges will follow.
Every financial services provider should be concerned about identity fraud, and this is why we have created a laser-targeted ID fraud solution, SynID.
3. Misuse of Facility continued its gradual decline.
A positive 2023 finding was the general decrease in Misuse of Facility – an organised first-party crime - recorded as an RFF in National SIRA.
Welcome as this news is, financial services organisations must interrogate RFFs, even where situations appear to be improving. This is because RFFs are broad, and in isolation can mask worrying fraud behaviours.
Take money muling – a Misuse of Facility fraud. There is evidence that APP scams leveraging sophisticated money mule tactics are on the rise, and costing Finance organisations millions (with higher penalties inevitable in 2024).
Taken at face value, a decrease in Misuse of Facility may unintentionally gloss over the money mule threat. Fortunately, RFF categorisation can significantly improve risk intelligence - something that Synectics Solutions is spearheading in our scams and mules pilot scheme.
4. Opportunistic fraud is entwined with the cost-of-living crisis.
Although Identity Fraud – an organised typology – dominated 2023's trends, opportunistic fraud remains a major challenge for Finance and Insurance.
National SIRA data tells us that most opportunistic frauds are first-party – comprising inflated salaries, falsified employment histories and other types of Application Fraud.
Given the ongoing cost-of-living-crisis, the nature of these opportunistic frauds is largely unsurprising. We know that fraud increases during times of hardship, so it remains vital that financial service providers maintain an accurate and timely view of their customer's financial and personal circumstances.
Trend takeaways:
- Identity Fraud associated with organised third-party crime was the primary Finance RFF in National SIRA.
- Misuse of Facility declined, but high vigilance must continue.
- The cost-of-living crisis, widespread ID verification requirements and access to AI image manipulation tools are connected to fraud increases.
- Opportunistic fraud was dominated by first-party typologies.
Are you hoping to strengthen your counter-fraud performance in 2023? Get in touch with one of our Fraud Consultants to learn about strategies and solutions that can help you achieve 2024's objectives. Arrange a call back at your convenience here. A call back at your convenience here.