About 1.4 million identity theft incidents were logged by the Federal Trade Commission in 2020, a figure that’s more than double the thefts from the year before.
As banking becomes an increasingly digital practice, consumers are becoming increasingly aware of vulnerabilities in the system.
A FICO report on how COVID-19 has fueled the financial sector’s digital shift found that American consumers have high expectations for identity verification. Sixty-two percent said they expect to verify their identity when opening an account digitally, while another 42% expect to set up biometric identification during the onboarding process.
Fake Businesses: A Real Problem
Remote onboarding has become increasingly common as COVID-19 persists, leading to a new rise in financial crime and making digital identity verification a vital security measure.
Even more worrisome is the increase in fraudsters impersonating businesses. As these scammers adopt more sophisticated schemes, the need for more advanced anti-money laundering (AML) and know your customer (KYC) solutions has become more apparent.
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Financial institutions (FIs) and eTailers are struggling to adapt to new AML/KYC rules, which were made even more crucial by the June adoption of new AML directives in the EU.
The U.S. has imposed more stringent data regulations as well, meaning a lot of banks and merchants are having trouble meeting compliance needs, said Rutherford Wilson, Trulioo’s vice president of emerging technology.
How to Mitigate Fraud Without Making Things Tougher for Consumers
As FIs employ more sophisticated digital banking tools, online threats become themselves more sophisticated. All the same, these institutions could be investing more in tech to battle fraud and money laundering.
While losses from fraud cost $42 billion, only 56% of respondents said they investigated the most serious incidents, according to a 2020 report. AML compliance pressures are also on the rise, with nearly three quarters (71%) of FIs reporting increased regulatory scrutiny.
To learn more about how using data combined with biometric tech has helped reduce fraud, download your copy of the AML/KYC Tracker, a PYMNTS and Trulioo collaboration.
