The state of fraud 2024: Predictions from an insider

2024 will usher in one of the most challenging – but transformative – periods ever experienced in fraud prevention. Worrying developments in the malicious use of technologies will collide with a packed roster of digital safety reforms and new liabilities for businesses. This unstable environment will shape fraud in five specific ways – as outlined by our Fraud Consultant, Liese Rushton.

1. Organised fraud and AI-enabled phishing scams

AI-generated scams became a frightening reality in 2023. And as tools become more accessible, scams supported by generative AI are set to grow in number and sophistication.

This means that in 2024, it will become far more difficult to distinguish between authentic and fraudulent information. Images, documents, and websites will be particularly badly affected.

Because generative AI is so adept at mimicking language, we expect organised financial crime to be increasingly accompanied by large-scale phishing scams that encourage fraudulent payments.

The good news is that the forthcoming Financial Services and Markets (FSM) bill will mandate 100% reimbursement from PSPs for customer losses related to fraudulent transactions.

However, ongoing PSP caution is vital: customers typically become less vigilant when the threat of financial loss is eased. As a result, transaction monitoring is critically important – and Synectics Solutions are actively piloting a game-changing solution.

2. Deepfakes are redefining the fraudster

Many of the most shocking scam stories of late have involved generative AI. Especially in the realm of voice and video cloning, which fraudsters are using to engineer dialogue and footage so convincing, that parents cannot distinguish their own child from a deepfake.

The startling growth of cheap, accessible AI solutions has played directly into the hands of fraudsters – and is proving eminently popular. Take the CEO of a UK-based energy firm, who transferred £190,000 to a financial criminal, having been tricked by an AI deepfake of the boss’ voice.

These so-called CEO scams present huge financial opportunities for fraudsters, with one Silicon Valley publication estimating that in 2023, 400 organisations a day fell victim. We expect that thanks to accessible, convincing AI-generated audio and imagery, CEO scams will only grow as a fraud typology in 2024.

3. Ethical approaches to identity fraud prevention

In 2023, our National SIRA fraud syndicate recorded up to three thousand more instances of false identities per quarter, versus the pre-Covid period.

Given how difficult false and synthetic IDs are to analyse – they mix genuine and fake personal information – it is no surprise that more ID fraud is being reported. The greatest challenge, though, is implementing authentication capable of halting these frauds, without alienating legitimate customers.

As such, we predict that counter- ID fraud conversations will pivot towards ethics and inclusion, with a particular focus on integrating a wider range of identity, history and risk score attributes as advised by the government’s Digital Identity and Attributes Trust Framework (DIATF).

It is highly likely that the current number of synthetic identities in circulation has reached a tipping point. To stem the threat, organisations are exploring non-traditional forms of verification, such as SynID.

4. Money muling needs a new data-driven mindset

The true cost of money laundering is difficult to calculate, but, if we take the UN’s estimate that the amount of money laundered annually equates to between 2% and 5% of global GDP, its value could exceed $4.9 trillion per year.

This is clearly a problem that must be promptly addressed. However, the information required to disrupt criminal activity exists in silos.

And although the Economic Crime and Corporate Transparency Act makes provisions to ‘enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime’, the mechanisms to share such information are generally lacking.

Sharing data trends is increasingly critical because money mule behaviour is changing. Synectics Solutions’ data reveals that the mule age bracket is expanding and is no longer a “young adult issue” – likely driven by the cost-of-living crisis.

To learn more about how our data exploration tools can be used in your fraud strategy, please get in touch with our Fraud Analytics Consultancy team.

5. Insider fraudsters expand their influence

For its net benefit, widespread remote working created vulnerabilities easily exploited by employees with fraudulent intent.

And there are a great deal of these malicious insiders around: recent data suggests that 35% of data breach attacks against financial organisations involve employees. 27% steal personally identifiable information or banking data.

The risk, which is surely linked to cost-of-living pressures, has not gone unnoticed by legislators. Take the UK government, who on 26^th December 2023 stated that should a senior manager commit fraud, the organisation by whom they’re employed commits fraud by association.

Constructive as mandated liability is, many organisations need solid guidance on how to mitigate insider threats. The Fraud Strategy team at Synectics Solutions is already seeking to help with a new intelligent ruleset based on fraud motivators across the employee lifecycle.

Synectics Solutions is here to support you in your fight against fraud. Why not talk through your challenges with one of our consultants? Click here to set up a call at your convenience.