Inside the dangerous rise of synthetic identity fraud — and the ways banks can fight it

By Robert Wallos, Director of Enterprise Architecture in Financial Services at Kyndryl

Synthetic identity fraud (SIF) is a type of fraud where criminals create a fictitious identity by combining real and fake information to fabricate a “synthetic” identity for financial crime. Often, this involves combining a real social security number acquired from a cyber breach with a fake name, date of birth and other personal details. The identity is then used to open accounts, obtain credit and commit various types of financial fraud. Traditional fraud detection systems frequently overlook this complex fraud pattern. 

Estimated to hit $23 billion in annual losses by 2030, SIF is the fastest-growing type of financial crime in the U.S., according to the London Stock Exchange Group. While SIF criminals are typically quite skilled, they can’t operate without a highly evolved ecosystem of forums, marketplaces and dark web services to support their efforts.

Here are five ways financial institutions can defend themselves and their customers against synthetic identity theft.

Synthetic identity fraud is catching many financial institutions off guard. This type of criminal activity evolves so quickly that it may appear to move faster than any efforts to stop it. But the right preparation can stifle any advantages of speed. And developing the right responses can minimize business impact when the inevitable attacks occur.