As more financial institutions move their services online, criminals have come up with clever ways to bypass traditional onboarding and security measures. They’re using stolen or synthetic identities to open accounts, then maxing out credit lines and cash advances before disappearing without a trace. This type of fraud is referred to as new account opening fraud, and it’s on the rise.

It can be new account fraud detection for banks, but it’s also a big loss of trust and confidence among customers. And it can lead to hefty fines from the Financial Crimes Enforcement Network (FinCEN), since the bank was supposed to know their customer and prevent this kind of fraud before it happened.

Securing the Onboarding Process: A Guide to Preventing Account Origination Fraud

Fraudsters are targeting financial institutions in general and specifically those that offer high-end products and services, such as iGaming sites, dating apps, and e-commerce merchants. They’re looking to use the fraudulent new accounts to launder money and avoid detection by transferring funds from the compromised account to real-life bank accounts they control or co-conspirators.

Fortunately, there are many ways to detect new account fraud. For example, a mismatch between the name on an ID document and the return by a credit bureau search of the applicant’s SSN almost always indicates fraud. Another red flag is if the applicant’s name matches multiple names on existing records, which could indicate a synthetic identity. And passive liveness detection can verify a person’s presence to help spot false selfies and automated images used for fraudulent purposes.