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Synthetic Identity Fraud Now a Primary National Security Priority.

Financial Crimes Enforcement Network (FinCEN) AML Priorities

On June 30th, the US Financial Crimes Enforcement Network (FinCEN) released their AML Priorities to banks, credit unions and other financial institutions. FinCEN, a part of the U.S. Department of Treasury, works to regulate financial crime for financial institutions.

One of the top priorities that FinCEN highlighted as “threats to the U.S. financial system and national security” is the rise of synthetic identity fraud (SIF).

According to the Federal Reserve, synthetic identity fraud is the use of a combination of personally identifiable information (PII) to fabricate a person or entity in order to commit a dishonest act for personal or financial gain. In fact, The Federal Reserve reported that synthetic identity fraud is responsible for 14.7 Billion in losses (2018).

Not only does SIF threaten banks and credit unions, but it also poses a threat to national security by enabling crime rings, as well as financing human trafficking and cyber-terrorism.

FiVerity discussed the growing importance of SIF as a part of FinCEN’s cybercrime priorities following the COVID-19 pandemic in an April interview with former FinCEN Senior Cyber and Emerging Tech Policy Officer, Carole House who currently is the Director of Cybersecurity and Secure Digital Innovation at The National Security Council.

However, when it comes to synthetic identity fraud, current technology does not suffice. The Federal Reserve reports that rules-based systems miss up to 85% of synthetic identity fraud, leaving financial institutions vulnerable to attack.

Luckily, FiVerity has been proven to detect more than 50% of synthetic identity fraud previously missed by traditional models. FiVerity uses sophisticated machine-learning that overlays existing fraud models and learns the patterns of fraudsters as they adapt their strategies.

Further, once a SIF fraudster is identified, FiVerity shares the fraudsters’ identity using double-blind encryption which allows financial institutions to share fraud intelligence on known synthetic identities, while protecting PII.

Want to learn how you can better protect your institution from synthetic identity fraud? Request a Demo today!