Businesses face a growing threat from increasingly sophisticated forms of fraud. Among the most complex to detect is layered identity fraud, where criminals create multiple synthetic identities that work together to appear legitimate. This tactic blends real and fabricated data, allowing fraudsters to build convincing profiles that can slip past traditional verification methods.
As advancements in artificial intelligence (AI) are helping fraudsters scale these efforts, businesses need to adopt more robust security measures, including biometric analytics, to identify these red flags early and stop fraudsters before it’s too late.
In this blog post, we’ll unpack how these layers of false identities are constructed and, more importantly, what can be done to combat this growing problem.
What is layered identity fraud?
Layered ID fraud is a very sophisticated form of identity fraud. Fraudsters create multiple synthetic identities by combining real and fake information, and then build a web of mimicked "interactions" to simulate legitimate activities, such as applying for loans or building credit histories. By creating a network of identities that support one another, fraudsters make their schemes appear more authentic and harder to detect.
The financial and reputational costs of layered identity fraud are staggering. Businesses, especially those in the fintech and financial services sectors, can experience losses into the billions, and the damage to customer trust and operational integrity is immense.
A layered defense strategy
An organization’s best defense is to adopt a layered and automated approach to ID verification. While no solution can guarantee absolute authenticity, a multi-layered approach significantly mitigates the risk of fraud and protects both businesses and consumers in the long run. Here’s how:
Document verification
Verifying documents provides 2 important layers of review. Not only are you ensuring that the document includes expected elements such as barcodes or Machine Readable Zones (MRZs), but you’re also confirming that the information provided on the document aligns with a person’s expected identity.
Biometric information reviews
Adding a liveness check to a photo ID review can more accurately tie the individual to the presented identity in a way that is more difficult to fake.
ID verification across multiple independent sources
Cross-referencing multiple, independent sources of identity information such as credit bureau checks, telecom data, financial credentials, and provincial credentials can help indicate consistency and a greater chance that the identity is real.
Oliu helps you stay one step ahead
The evolving nature of synthetic identities and layered ID fraud demands constant vigilance and innovation. Businesses that invest in multi-layered ID verification processes will be better equipped to protect themselves.
Oliu offers a multi-layered, customizable ID verification solution that supports FINTRAC and KYC compliance without heavy development costs or operational resources. Oliu supports both single and dual source FINTRAC requirements by combining two or more independent sources of information for identity verification, including provincial credentials, financial credentials, and document ID and biometrics.
Book a demo with us today to see how we can help protect your business.