Combatting serial fraud in the digital age: A deep dive into financial crime


In a recent whitepaper by Resistant AI, the firm outlined the threat of serial fraud and how to combat financial crime in document automation.

The adage “Technology is changing everything” rings especially true in the financial services sector. Thanks to technological advancements, banking and financial activities like opening accounts, transferring funds, or applying for personalized loans are now effortless and scalable tasks. However, this technological evolution has also paved the way for a significant transformation in fraud and financial crime.

Criminals no longer need to commit crimes in person; they can now operate behind the safety of fake identities, often from remote locations without extradition treaties. The automation of fraudulent activities has amplified the scale of these crimes. For instance, while opening a single fake account for a small financial gain might seem insignificant, the ability to create 100,000 accounts in a matter of days using automated scripts dramatically alters the risk equation.

A key battleground in this scenario is customer verification, particularly documentation. The digitization of documentation has dual implications: it offers an unprecedented customer onboarding experience and simultaneously introduces the risk of large-scale fraud. This is where the concept of serial fraud comes into play, redefining the scale of document fraud.

Serial fraud manifests in two primary forms: decentralized and concentrated. Decentralized serial fraud involves retail fraud-as-a-service models, distributing editable fraud templates on platforms like social media and online marketplaces. These services target individuals without the technical know-how to create fraudulent documents, often affecting online lenders and tenant screening processes.

On the other hand, concentrated serial fraud involves more sophisticated, startup-like operations. These enterprises use automation and iterative experimentation to bypass controls, enabling organized crime at an unprecedented scale. Such fraud is prevalent in payment providers, banks, and financial marketplaces.

For financial institutions, serial fraud presents two major challenges. First, the automation of document processing, while efficient, opens up vulnerabilities to forged documents. Secondly, the sheer volume of fraudulent documents makes it nearly impossible for individual fraud-fighters to identify and track these crimes effectively.

To combat this, financial institutions must deploy comparative systems that assess all incoming documents and associated behaviors. While human oversight remains crucial, it needs to be complemented by advanced technology capable of identifying and clustering related fraudulent activities.

Want to read the full whitepaper? Click here to download.

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