Convoy Unltd Blog New Account Opening Fraud

New Account Opening Fraud


New account opening fraud happens when criminals use a fake identity to open an account at a financial institution and then conduct fraudulent activity. This can include stealing funds, buying items with fraudulent credit, and laundering money. New account opening fraud is a challenge for banks, and it can result in costly fines and losses if not caught in time. This article explores the challenges of detecting and stopping this type of fraud during the digital onboarding process, and how financial institutions can deploy key strategies to prevent it.

The first step to fighting new account opening fraud is ensuring that the identity of an applicant is valid during the onboarding process. This requires a combination of digital ID document verification (to identify stolen or fraudulent documents) and facial recognition to verify that the person applying is the real person they claim to be. Passive liveness detection can also help confirm that a selfie provided by an account holder is genuine by checking for the presence of key signs such as the eyes, mouth, eyebrows, and ears.

New Account Opening Fraud: Identifying Risks and Mitigating Threats

When it comes to committing new account opening fraud, criminals are becoming increasingly sophisticated in their tactics. In addition to using stolen identities, they are leveraging synthetic identity information that they create by piecing together bits of personal information. This makes it hard for traditional fraud models to detect these applications, as they often go undetected when submitted using this methodology. To combat this, financial institutions must rely on advanced methods that include utilizing behavioral analytics and third-party data to check for red flags during the account opening process without irritating legitimate applicants.

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