Identity Verification Gets a Pulse Check

Dead people don’t spend much, but the federal government nearly sent them tens of millions of dollars anyway.

The U.S. Treasury Department said Tuesday (July 21) that its government-wide verification process found more than 4,900 payments worth roughly $99 million associated with deceased payees. The payments surfaced as the department and the Bureau of the Fiscal Service screened more than 885 million transactions totaling approximately $2.77 trillion.

The money did not go out the door. The department returned the flagged payments to the originating agencies for review before disbursement.

The department did not say all $99 million represented fraud. But the exercise emphasizes the importance of checking first and paying second. Stopping questionable money is generally easier than trying to get it back.

Banks and FinTechs have billions of reasons to pay attention.

The PYMNTS Intelligence report “When ‘Good Enough’ Isn’t Enough: Digital Identity Verification in the Age of Bots and Agents,” a collaboration with Trulioo, found that financial services firms lose nearly $34 billion in revenue because of identity verification failures. At the same time, 76.1% of firms said their know your customer (KYC) and know your business (KYB) processes have caused them to miss growth opportunities. Identity friction means revenue friction. The report revealed that 76% of financial services firms generate at least three-quarters of their revenue digitally.

Check First, Pay Second

Washington is now putting more verification between authorization and payment.

An executive order issued in March 2025 directed the Treasury Department to strengthen controls around federal disbursements and consolidate more payment activity through the department. Agencies were also directed to provide information needed to verify payments before federal funds are released.

In the latest example, the department’s screening uses expanded access to the Social Security Administration’s Full Death Master File, giving it more comprehensive information to compare against prospective payments.

The technology may be complicated, but the underlying idea is not. The goal is to keep authoritative information current, connect it to the payment process and look for trouble while the sender still has the money.

Financial institutions face a broader identity challenge.

Banks and FinTechs traditionally concentrate much of their verification effort at account opening. But passing KYC once does not make an identity permanently trustworthy.

Credentials get stolen. Customer information changes. Accounts get compromised. Synthetic identities combine legitimate personal information with invented details to create customers convincing enough to pass conventional checks.

Fraudsters, in other words, do not politely confine themselves to onboarding.

That makes verification relevant throughout the customer and payment lifecycle. The important questions that must continuously be answered include whether a customer passed KYC when the account was opened, and whether the institution still has enough current information to trust the transaction happening now.

Better data can provide another route.

Among financial services firms using a global identification platform, 92.3% said KYC/KYB had become easier over time, according to the report. More integrated identity infrastructure can potentially give institutions better signals without requiring every legitimate customer to repeatedly run an authentication obstacle course.

Treasury just supplied a $2.77 trillion demonstration of the basic principle. For financial institutions facing nearly $34 billion in identity-related revenue losses, there is a useful lesson in those numbers. Know who is getting the money. Check while there is still time to stop it. And, at minimum, make sure they have a pulse.