Kimberly Sutherland

LexisNexis^® Risk Solutions warns that the latest wave of AI-generated deepfake documents, images and liveness videos could leave organizations significantly exposed if their identity and customer onboarding checks fail to keep pace.

The global fraud prevention specialist says it has seen a 180% year-on-year increase in attacks and warns that the quality and sophistication of deepfake documents and images improves daily. With Juniper Research predicting 100 billion identity-related checks will be carried out this year and one in every 100 failed checks will contain a deepfake, experts at LexisNexis Risk Solutions warn businesses everywhere to expect rising volumes of daily attacks targeting their digital services.

“Deepfakes vastly complicate digital identity verification. Protecting against this surge of attacks requires a solid line of defense incorporating end-to-end capture, fraud analysis and liveness checks.” says Kimberly Sutherland, global head of fraud and identity at LexisNexis Risk Solutions. “Even the smallest gap in your defenses is like an open window that a fraudster can climb through.”

Bad actors use deepfakes to bypass identity checks and create new accounts or take control of existing user accounts to make unauthorized payments, withdrawals and online purchases, launder the proceeds of crime, or abuse new customer bonus incentives. One in every 11 new account creations in 2025 was a fraud attack and almost a fifth of all reported fraud involved unauthorized access of customer accounts, according to the company’s latest Cybercrime Report.

As deepfakes become more realistic, identity checks need to be capable of spotting nuanced flaws in document security features and closely examine facial expression and skin tone.

Sutherland continued, “Highly realistic deepfakes call for forensic examination of hundreds of security features: document structure, image integrity, holograms, etching and microtext. Deepfakes typically fail on several minor flaws, as opposed to physical forgeries that fail on one major issue, but they are not easy to spot with the human eye during manual checks. The same goes for deepfake images and videos. Checks need to assess micro movements in facial muscles, analyse light reflection and detect image manipulation and injection tactics.”

Analysis shows that fraudsters favor high-value, reusable identity documents, including passports, driver’s licenses and national ID cards, with the most highly sought after documents issued by the United States, United Kingdom, Germany and France.

Shane O’Sullivan, research analyst at Juniper Research, added, “As digital identity verification evolves, the core requirements shift toward the technical ability to integrate multiple trust signals into a coherent system architecture. Effective solutions depend on the coordination of document authentication, biometric liveness detection and real-time risk analysis within a single workflow. Increasingly, fraud detection system success is defined by how well it can detect advanced threats such as synthetic identities and deepfakes while maintaining interoperability across standards and minimising latency and user friction.”

Sutherland concluded, “The risk to businesses is real from both a financial and reputational standpoint. The reality is that AI-generated attacks are practically doubling year over year and getting more sophisticated with every attack.”

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Kimberly Sutherland

Research from LexisNexis® Risk Solutions takes a deeper look into how cybercriminals operate using the dark web in its latest report, Fraud for Sale: Untangling the Dark Web, part of the annual Global State of Fraud report. The insights stem from a proprietary study of the dark web commissioned in 2025.

Key findings

The study concludes that the dark web facilitates large-scale criminality by making it easy for anyone with sufficient IT skills to obtain the knowledge and tools to defraud individuals and businesses. Regulators and law enforcement repeatedly close down illicit marketplaces on the dark web only for replacements to spring up to meet the unwavering demands of the criminal underworld.

“The hidden nature of the dark web has appealed to the criminal underworld for more than a decade, arming and sheltering fraudsters from detection,” said Kimberly Sutherland, global head of fraud and identity, LexisNexis Risk Solutions. “Now we can shed new light, not only on what cybercriminals do on the dark web, but on the fraud controls they are least able to bypass. Fraudster feedback tells us exactly what interferes most with their criminal exploits to hamper their success: real-time liveness checks, account activity, phone and email analysis and device fingerprinting, to name a few.”

The AI frustrating fraudsters

The use of AI and deepfakes in fraud is well documented. Yet, the report uncovers dark web chat forums awash with users venting their frustration with the latest AI-driven deepfake detection systems employed by banks and others that can scan for blood flow and micro muscle movements. Such technology appears to present a specific hurdle for would-be fraudsters, with one commenting “There is no bypass.” The research also found related forums involving some imaginative attempts to circumvent checks, such as with latex masks.

Several marketplaces were found selling established email accounts and devices capable of passing basic fraud checks. Many also offer ‘fraud-ready’ bank accounts supplied with login details and pre-completed identity checks.

Sutherland continued, “Our research reveals the dark web to be a de-facto fraud superstore giving bad actors easy access to the knowledge and tools to conduct all manner of criminal acts. With these tools they can apply for bank accounts, overdrafts and credit, set up retail accounts and make purchases without fear of consequences.

“It’s also worrying that many of the solicitations come complete with tutorial videos, showing ‘newbie’ scammers how it’s done, thereby creating a new cottage industry of amateur fraudsters across the globe. The good news is that we are not powerless against cybercriminals. As quickly as they adopt new technology it is increasingly apparent how those same AI innovations can thwart their activities.”

No safe harbor for cybercriminals

In an ironic twist, the study also finds the dark web is no safe haven for criminals. Exit scams are rife, where dark web marketplace administrators abruptly cease trading, taking their customers’ funds with them. This has led some marketplaces to take measures to demonstrate legitimacy by calling out bad behavior, barring users and banning the sale of certain items known to be worthless to buyers. As a consequence, the report found some evidence of alternative, easier access versions of these dark web marketplaces selling similar products cropping up on mainstream popular social platforms.

Read the report.

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Stephen Topliss

LexisNexis® Risk Solutions releases its annual Cybercrime Report, an analysis of over 104 billion global transactions in the LexisNexis^® Digital Identity Network^® platform during 2024. The report, The Calm Before the Storm?, shows a significant swing in the composition of global fraud attacks, with first-party fraud now the leading type globally, representing a third (36%) of all reported fraud in 2024, up from 15% the year before.

First-party fraud includes misrepresenting or giving false personal or account information for financial gain, such as when applying for a loan, claiming a credit or debit card purchase is fraudulent in order to get a refund (known as friendly fraud), or claiming ordered goods were not delivered. Buy Now, Pay Later (BNPL) providers and financial institutions are among the organisations reporting an uplift in first-party fraud, which is known to be exacerbated by periods of inflation and the rising cost of living. Increased institutional liability for scams, driven by regulation, is also likely having an impact.

Key vulnerabilities

Account takeover (ATO) fraud – fuelled by phishing and smishing activity – represents a further 27% of global reported fraud (down by ~2% year on year), while scams, including authorised push payment (APP) fraud, represent 11% of cases (down from 16% of cases in 2023). The report also found one in nine (11%) password reset attempts in 2024 was a fraud attack, rising to over one in four (27%) reset attempts initiated on a desktop computer.

“These findings represent a notable shift in global fraud patterns, with consumers now emerging as the single largest source of human-initiated fraud,” said Stephen Topliss, vice president of fraud and identity, LexisNexis Risk Solutions. “The change in composition of attacks presents a significant challenge for fraud prevention since detecting first party fraud requires a subtly different approach from detecting scams or account takeovers. Organisations can’t afford to be complacent, however – there were more than three billion brute-force automated account takeover attacks detected last year alone and scams remain a global problem. It is vital for organisations to have models tuned to detect these varied forms of fraud.”

Sector-specific and regional trends

After two years of substantial increases in overall global¹ attacks, the latest Cybercrime Report finds that rates began stabilising in 2024, with only a marginal (1%) increase in the human attack rate and a 15% decrease in global bot attacks – algorithms designed to break into customer accounts using stolen credentials. However, LexisNexis Risk Solutions believes this relatively calm global picture may obscure underlying signs of a coming storm powered by AI.

The attack rate on Communication, Mobile and Media (CMM) companies increased by 15% year on year and global Financial Services firms saw an 18% uplift in automated bot attacks.

Attack rates also vary at a regional level:

• EMEA continues to see the lowest regional attack rate globally at 0.6% of transactions, according to the LexisNexis® Identity Abuse Index, which records daily attack rates.

• LATAM has also seen a sustained decrease in its attack rate (1.6%) since the end of 2023, now putting it lower than North America at 2.2%.

• In contrast, APAC’s attack rate grew significantly by 37% through 2024, now standing at 1.5% of all transactions in the region.

Topliss continued, “We are at a potential tipping point. While many organisations have improved their defences over the past few years, we also know that cybercriminals are embracing new innovative, AI-enhanced capabilities and we will likely see these extensively tested and executed over the coming months. Our analysis of attacks over a longer multi-year period shows that significant attacks often come in waves and this latest set of figures could indicate the imminent arrival of the next, AI-enabled wave of global attacks.”

Read the report.

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 The report offers insight into the worldwide financial cost of compliance, with financial institutions bearing a total cost of U.S.$206.1 billion. This cost is comparable to more than 12% of global research and development (R&D) expenditure^[1] and equates to $3.33 per month for each working-age individual on Earth^[2].

Key findings from the LexisNexis Risk Solutions True Cost of Financial Crime Compliance Report – 2023 include:

Artificial intelligence (AI) leaves its mark

While certain industries are still determining the ways in which AI and machine learning (ML) will bring about an influence, 71% of professionals in financial crime compliance indicate that their organisations are already enhancing data utilisation through advanced analytics. Additionally, 72% confirm that they employ analytics and AI to enhance their compliance procedures. 

However, similar to historic changes in ways of working, problems with data quality, data silos, outdated legacy systems and a lack of collaboration internally can create avoidable compliance activity and expenditure.  

EMEA remains a high-cost center for financial crime compliance

The study reveals that EMEA financial institutions and their customers continue to incur a more substantial expense for financial crime compliance compared to other regions. The overall cost of financial crime compliance in EMEA surpasses that of the U.S./Canada by 39.8%. This difference is partly indicative of the escalating intricacy of compliance requirements.

Globally, 78% of organisations and specifically 80% in EMEA indicate that the intricate network of regulations and sanctions acts as a constraint on their business operations. In contrast, APAC and LATAM are comparatively more cost-effective regions, despite significant compliance expenditure. The financial compliance expenses in APAC amount to 74.5% of those in the U.S./Canada, while LATAM’s costs are 24.7% in comparison.

Change to address future challenges

CEOs, vice presidents and directors in financial institutions globally are not complacent. Many new initiatives add to the ongoing complexity they face in meeting financial crime compliance requirements. However, 85% of financial institutions place enhancing customer experience at the top of their priority list. This reaffirms a commitment towards fostering trust and delivering satisfaction, even in the face of proliferating financial threats. A substantial emphasis of these efforts revolves around optimising the efficiency and efficacy of financial crime compliance concerning payments. Globally, 74% of institutions emphasise that this is a critical or high-priority endeavor.

“The financial impact of crime resonates through businesses’ financial statements and consumers’ wallets,” said Grayson Clarke, senior vice-president for LexisNexis Risk Solutions. “In the pursuit of the common good, legislators and regulators collaborate tirelessly with financial institutions to establish necessary mandates. However, these endeavors aren’t without costs. Our report underscores that financial institutions are making significant investments to stay compliant with financial crime regulations. Effective collaboration within these institutions is pivotal for enhancing the customer experience while managing these costs. Leveraging emerging technologies alongside existing solutions can empower institutions to achieve their objectives and deliver optimal customer outcomes.”

Download the Report.

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[1] https://uis.unesco.org/apps/visualisations/research-and-development-spending/
[2] https://data.worldbank.org/indicator/SP.POP.1564.TO

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The report, Trust and Collaboration as Foundations to Fight Fraud, shows that the global digital attack rate increased 20% year over year (YOY) compared to 2021, continuing the trend of digital fraud rising as economies re-open following the pandemic.

The LexisNexis® Identity Abuse Index, which records the percentage of attacks per day, shows attack rates fell in the fourth quarter of 2022 although the picture varies by region, with sizeable spikes in APAC, LATAM and North America at the end of the year. 

Despite the effects of economic uncertainty, inflation and the war in Ukraine, digital transactions in 2022 went up by 24% YOY primarily driven by increasing transactions in financial services (29%) and ecommerce (17%). 

Organisations are looking to establish consistent digital identity insights across all digital channels and end-customer touch points to mitigate rising fraud levels. They are striving to increase the level of trust with their customers, as well as identifying risk more easily. The report showed that the percentage of transactions classified as trusted in the Digital Identity Network® platform increased by 9% YOY, allowing organisations to provide a smoother customer journey.

“Businesses remain vulnerable to transactional fraud during this time of accelerated digitalisation,” said Stephen Topliss, vice president of fraud and identity strategy for LexisNexis Risk Solutions. “Despite heightened regulatory scrutiny, technological innovations and higher public awareness, there are persistent challenges in preventing fraud. This trend is likely to endure as consumers continue adopting digital channels. As fraud levels and its sophistication increase, relying on multi-factor authentication alone as a defence is inadequate in today’s digital world. Organisations, industries and countries must collaborate and identify the interconnected signals of complex fraud attacks because criminal networks working in a structured way are here to stay. Addressing the latest scams requires targeted machine learning models that can consume the latest digital intelligence insights, behavioural biometrics signals and mule account indicators.”

Key findings from The LexisNexis Risk Solutions Cybercrime Report, January to December 2022:

• Mobile Channels Increasingly Popular – Mobile transactions have reached a record high of 77% of all observed transactions in the Digital Identity Network, with the mobile app channel making up 82% of all mobile interactions.
• Attack Rate Continues to Rise – The global attack rate continues to increase, driven by an uptick in the financial services and ecommerce industries at 31% and 29% respectively. The report shows that criminals continue to target the communications, mobile and media industries more than any other sector. However, a noticeable decline of 27% YOY in the overall attack rate suggests criminals are changing focus. 
• Vulnerabilities in Payments – Across all desktop and mobile channels, attack rates on digital payments increased 27% YOY. Alternative payment methods, such as digital wallets, QR code payments and peer-to-peer transfers, continue to gain popularity, particularly in APAC. The shift has contributed to the 32% YOY growth in payment transactions in that region, yet criminals are also fast at exploiting vulnerabilities. The report shows a 50% YOY increase in APAC’s payment attack rate.
• Lucrative Avenue for Cybercrime – Automated bot attacks in the ecommerce space have grown 195% globally. Almost half of these attacks focused on the U.S., where ecommerce focused bot attacks increased by 127% YOY. Bot attacks increased 112% in the U.S. gaming and gambling industry, while the sector grows due to legalisation in more states.

Read the report.

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Fraud is a global threat: LexisNexis® Risk Solutions

LexisNexis® Risk Solutions has shared the latest findings of scams in an increasingly borderless digital landscape in Asia Pacific, including the trends and types of fraud in the region and the outlook for 2023.

The findings leverage the data from the LexisNexis® Digital Identity Network®, which processed 6.5 billion transactions from July 2021 to June 2022 in the Asia Pacific region. It recorded 3.3 billion bot attacks and fraud attacks during this period globally.

Stephen Topliss, vice president, fraud and identity, LexisNexis Risk Solutions shared his insights on the rise of frauds faced by Asia Pacific organizations and how the digital shift is fuelling the fraud surge. Topliss said, “We can see a consistent growth in our data in Asia Pacific over the past year, which highlighted how third-party fraud has evolved to be more sophisticated than ever.”

Data from LexisNexis Risk Solutions shows the percentage of attacks per day across the entire Digital Identity Network® platform, which tracks and provides an indication of how attack patterns have changed over time.

Key Findings and Highlights:

• Fraud is a Global Threat: LexisNexis Digital Identity Network shows that scam centers in Cambodia are an emerging source of a significant number of cyberattacks targeting Hong Kong and Singapore. Cyberattacks in other countries in Asia Pacific, such as Japan and Australia, show more of an international distribution.
• Scammers Targeting Mobile Channels: Digital fraud attacks continue to rise globally, especially on mobile channels. Attack volumes on mobile surged 94% year-on-year worldwide, from 260 million to 505 million, compared to the same period last year.
• Evolution of Scams Across Borders: Traditional third-party fraud is most commonly found in many parts of Asia and has slowly evolved into impersonation scams with third-party account access. This type of more sophisticated scam is harder to detect and more prevalent in Hong Kong and Singapore. Australia, the U.K. and the U.S. are showing a newer trend of impersonation scams related to authorized push payment fraud.

“Organisations that rely on conventional methods to detect scams will find it challenging to keep up with the complex and fluid global landscape,” said Thanh Tai Vo, director of fraud and identity, LexisNexis Risk Solutions. “Transitioning from physical identity to digital identity requires a multi-layered defense, with digital intelligence and behavioral analysis as key elements, has become the trend to make smart, informed decisions for fraud prevention. Adaptive authentication will also be vital in helping businesses to thrive and stay competitive with lower friction and higher security in today’s mobile age.”

Download a copy of the True Cost of Fraud Study – APAC Edition or the LexisNexis Risk Solutions Global State of Fraud and Identity Report to explore more research and insights from industry experts on recent fraud and scam-related statistics and trends.

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Pandemic-driven digital transaction growth continued to attract fraud attacks.

LexisNexis® Risk Solutions released the results of its first Global State of Fraud and Identity Report, exploring research and insights from industry experts on recent statistics and trends from our industry-recognised studies on the Global True Cost of Fraud and transaction data from over 39B transactions from the LexisNexis® Digital Identity Network® from January 2022 to June 2022.

The report demonstrates how digital transactions dominated the global marketplace as the pandemic-driven trend of consumers migrating to online interactions became commonplace behavior. Digital transactions in the LexisNexis Digital Identity Network rose by 37% YoY for the period.

Pandemic-driven digital transaction growth continued to attract fraud attacks, with global businesses recording a 32% jump in the human-initiated attack rate over the past 12 months, while high-velocity automated bot attacks were up 38% YoY.

Shifts to mobile channels continued to increase, reaching 76% of all transactions in the Digital Identity Network. Consumers today use an average of four connected devices to facilitate digital economy transactions. The addition of new ecommerce channels via marketplaces and within the wider banking ecosystem, along with a proliferation of payment options such as Buy Now Pay Later (BNPL), digital wallets and QR codes, contributed to a growth in transactions across mobile channels.

As consumers adopt multiple digital channels and payment formats, they expect a positive experience and trusted security measurements at every touchpoint. Identification and authentication solutions across the entire customer journey are becoming mandatory, as fraudsters build attack strategies at every stage. 1 in 12 new account openings and 1 in 20 password resets represent an attack.

Greater connectivity is leading bad actors to continually devise new methods and expand the complexity and scale of their attacks. Cybercriminals quickly launch complex attacks on the weakest link in the omnichannel network, targeting individuals who are newer to transacting online with less cybersecurity awareness while targeting companies that in their rush to provide consumers with digital transaction options, have not deployed adequate defences.

Large-scale cybersecurity breaches and the recent digital evolution have created an ideal incubator for scams to cultivate and thrive with identity theft. Studies show that optimizing identity verification approaches leads to safer omnichannel ecosystems.

Key Findings from the LexisNexis Risk Solutions Global State of Fraud and Identity Report:

• Bot Attacks Continue Rising: Businesses globally experienced a 38% increase in malicious bot attacks in the past 12 months. Ecommerce businesses in particular face a bigger threat as the bot attack rate increased 155% YoY. Regionally, EMEA recorded the highest growth in bot volume (98%), followed by LATAM (83%).
• Human-Initiated Attacks Also Continue to Grow: Human-initiated attack rate grew 32% YoY globally. North America showed the highest YoY increase of 52%, followed by EMEA (19).
• Fraud Evolves with New Payment Methods: Increased adoption and strong demand for contactless payment methods in APAC are major contributors to the rise of QR code fraud. QR code payments and peer-to-peer transfers are becoming the leading payment channels in Southeast Asia and India. BNPL is gaining traction globally and in EMEA particularly, leading to an increase in New Account Opening fraud.
• Risks Across the Customer Journey: Fraud networks are increasingly industrialized and pervasive in the omnichannel digital ecosystem leading to a dramatic rise in scams including social engineering, identity theft, password reset and account takeover fraud. The escalating risk of account takeover fraud is one of the biggest threats, as mobile app logins attack rates increased 211% YoY.
• Identity Verification Remains the Top Hurdle: Customer identity verification remains a top challenge for global businesses across APAC, EMEA, LATAM and NAM. Global businesses cited limited real-time third-party data (46%) and limited real-time transaction tracking (43%) as the two biggest challenges in verifying customer identity in online channels.
• Industrialized Fraud Networks Attack Businesses Across Border: Fraudsters work within complex networks. Every piece of data used is linked to the next valuable piece of data on a mass global scale. Therefore, businesses and industries need greater collaboration globally to fight the fraud network but also to understand who the trusted consumers are. Gaining visibility of trusted consumers allows businesses to open up new revenue channels and upsell to a loyal consumer base.

“Digital fraud has continued to grow as economies around the world re-opened in 2022, as we anticipated in our H2 2021 Cybercrime Report based on early trends in the U.S. and EMEA. The latest surge in scams shows how the fraud landscape will continue to morph. Organizations need to use flexible fraud prevention models coupled with an adaptive authentication approach,” said Stephen Topliss, vice president, fraud and identity, LexisNexis Risk Solutions.

“Using digital identity intelligence can improve the omnichannel consumer experience by providing a unified and persistent view of associated risks, helping to drive conversion rates, customer satisfaction and loyalty. A solution approach deep in layers, combining behavioral biometrics with global digital identity data and risk-appropriate authenticators, enables businesses to confidently make risk-based decisions while delivering a friction-appropriate customer journey.”

Methodology

The LexisNexis Risk Solutions Global True Cost of Fraud is an extensive survey of 2,952 risk and fraud executives in retail, ecommerce, and financial services/lending across APAC, EMEA, LATAM, and North American regions.

Analysis based on transactions and attacks detected by the LexisNexis Digital Identity Network (the Digital Identity Network) from January – June 2022, during near real-time analysis of consumer interactions across the online journey, from new account creations to logins, payments and other non-core transactions such as password resets and transfers. Transactions are analyzed for legitimacy based on hundreds of attributes, including device identification, geolocation, previous history and behavioral analytics. LexisNexis Risk Solutions customers benefit from a global view of risks, leveraging global rules within bespoke policies that are custom tuned specifically for their businesses.

Read the report.

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Leslie Bailey

LexisNexis® Risk Solutions revealed the results of its 2022 Financial Transparency and Inclusion Report. The survey of banks, insurers and non-bank financial institutions in 13 countries and regions aims to better understand financial institutions’ commitment to financial transparency and financial inclusion and the challenges they face in achieving these twin goals.

Financial inclusion is a global issue. According to The World Bank^[1], there are 1.4 billion unbanked individuals globally and the financial services industry faces challenges decreasing this number. There are many factors affecting financial inclusion: Poverty, a thin credit file, living in a cash-based society, history of bad debt and/or a lack of financial education can all impede access to financial services.

One way to convert the unbanked to a banked customer is to improve financial transparency. Financial institutions need the ability to identify consumers and understand their risk profiles, both to maintain regulatory compliance and support extending financial services to consumers. The more institutions understand about consumers, the easier it is to offer appropriate financial services. However, 69% of respondents agree that the unbanked or underbanked are harder to onboard than other types of customers and businesses due to lack of data.

The report reveals that financial institutions can do more to achieve greater transparency, indicated by the 64% of respondents who say identity verification is a challenge when onboarding individuals.

Key findings from the report:

• Financial institutions remain strongly interested in financial transparency and inclusion, with two-thirds of institutions expressing commitment to supporting financial inclusion.
• Many financial institutions turn away significant numbers of potential customers due to current Know Your Customer (KYC) processes. The most challenging customer onboarding hurdles faced by institutions lay within difficulties collecting and verifying customer information.
• Interest in data sharing to support KYC processes is growing. Nearly 80% of financial institutions express interest in a global Customer Due Diligence (CDD) utility, compared to just over 70% in 2019.
• The pandemic posed a challenge to financial crime and compliance operations at financial institutions, with large numbers of applicants seeking government assistance loans and financial institutions unable to verify identities in person due to lockdowns. However, it also led to financial institutions embracing more digital practices, with ninety percent (90%) of institutions reporting that the pandemic has accelerated adoption of Artificial Intelligence (AI) and other next-generation technologies.

“Financial institutions have clear responsibilities to verify customer identities and ensure compliance with national and international regulation,” said Leslie Bailey, vice president, financial crime compliance, LexisNexis Risk Solutions. “Rejecting potential customers due to inefficient or manual processes rather than regulatory reasons can be detrimental to genuine individuals trying to access financial services. With robust data and the right technology and processes in place, institutions can help improve global rates of financial inclusion without compromising on compliance.”

2022 Financial Transparency and Inclusion Report

LexisNexis Risk Solutions and research and advisory firm Celent designed the Financial Transparency and Inclusion Survey. Celent provided analysis around the results. The online survey was conducted in late 2021 and received 297 completed responses globally from c-suite and other senior leaders with responsibility for compliance, retail and commercial areas. 

Read the report.

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[1] https://www.worldbank.org/en/publication/globalfindex/interactive-executive-summary-visualization

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The cost of fraud rose 10% – 16% across APAC from 2019 pre-pandemic levels.

LexisNexis® Risk Solutions released the latest Asia-Pacific edition of the LexisNexis® True Cost of Fraud Study, which surveyed 387 risk and fraud executives in Malaysia, Philippines, Singapore and Thailand. The study analysed fraud trends in retail, ecommerce, financial services and lending industries and spotlights key pain points related to new digital payment methods and transaction channels.

The study found the cost of fraud rose 10% – 16% across APAC from 2019 pre-pandemic levels. The LexisNexis Fraud Multiplier determined that for every U.S. $1 lost to fraud costs the organisation an average of $3.99, compared to $3.50 in 2019. The cost of fraud per transaction was higher than average, costing digital banks and alternative lenders $6.33. Other new payment channels, such as ‘buy now pay later’ (BNPL) and digital wallets, cost businesses $4.75 for every dollar lost to fraud.

Fraudsters evolved tactics in parallel with the changes in consumer behaviour brought on by the pandemic. A recent Cybercrime Report^[1] showed consumers made a significant shift to mobile transactions, which now accounts for 75% of all transaction traffic globally. While in-person transactions remain the most popular point-of-sale channel, fraud occurs more in online channels than mobile channels. Within the mobile channel, 34% of fraud occurs through mobile web browsers.

Key findings from the True Cost of Fraud Study – APAC edition:

• Fraudsters Target Alternative Finance Providers – Competition in the BNPL market is accelerating globally, led by local, homegrown players across markets, according to the study. BNPL providers recorded a 65% jump in new account creations, which aligns with the strong growth in remote online and mobile transactions. However, BNPL providers also account for more than one-tenth of payment losses, which is disproportionately higher than the average volume of transactions through other payment channels.
• Identity Verification Challenges – The top contributor to fraud losses for businesses remains the inability to identify synthetic identities and verifying and authenticating identities using attributes such as phone numbers, email addresses, behavioural analysis and devices. Ecommerce merchants in particular find identity verification challenging since it requires finding a balance between providing a seamless customer experience and implementing step-up authentication and security measures.

• Adoption of a Fraud Management Framework – Almost all digital banks and alternative finance providers including BNPL and digital wallets have not yet fully integrated cybersecurity and operations into fraud prevention processes. Findings also show that organisations are not widely using artificial intelligence (AI) and machine learning (ML) models for fraud detection, weakening mitigation efforts. Percentage of organisations using various capabilities to fight fraud:

• • Rules-based Approaches – 52%
  • Crowdsourcing – 36%
  • Social Media Intelligence – 33%
  • Cybersecurity Alerts – 25%
  • AI/ML Models – 21%

“Organisations are fighting a tough battle against fraudsters in the new normal,” said Thanh Tai, director of fraud and identity strategy, LexisNexis Risk Solutions. “Fraud is sophisticated and evolving exceedingly fast. We are seeing a high volume of fraud attempts following a continued shift towards digital channels spurred by the pandemic. This means businesses must integrate a fraud detection and prevention approach with both physical and digital identity attributes to enhance customer experience, stay competitive and avoid losses.”

Methodology

The True Cost of Fraud APAC study surveyed 387 risk and fraud executives in retail, ecommerce and financial services/lending across Malaysia, Philippines, Singapore and Thailand. Data collection occurred during February/March 2022 and survey questions reference the past 12 months.

Download a copy of the True Cost of Fraud Study – APAC Edition or register to attend the LexisNexis Risk Solutions True Cost of Fraud APAC webinar on Tuesday, 19 July, 11am SGT to learn more.

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[1] https://risk.lexisnexis.com/global/en/insights-resources/research/cybercrime-report?utm_campaign=bsglfi22.fi-gl.2021h2ccr&utm_medium=email&utm_source=1_party_email&utm_content=ccrforprnewswire

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Costs of combating cyber crime driven by the increased compliance staff hiring and the complexity of preventing financial crime.

LexisNexis® Risk Solutions has released its first Australian edition of the LexisNexis True Cost of Compliance Study.

The study revealed that Australian financial services companies are expected to spend more than a collective U.S. $2.54 billion (AUD $3.6 billion) on financial crime compliance, driven by the increased compliance staff hiring and the complexity of preventing financial crime.

The study, which surveyed 50 decision makers in the Australian market between December 2021 and February 2022 and is part of a larger Asia-Pacific regional study, found that the exposure of Australian financial firms to financial crimes has increased in the past 18 to 24 months. Eighty percent (80%) of Australian compliance professionals in financial firms ranked money laundering as the highest risk within their compliance operations. Respondents also indicated that third party professional service providers, such as accountants and lawyers, played a role in facilitating money mules to launder proceeds of predicate crimes.

Increasing anti-money laundering (AML) regulations, evolving criminal threats and ongoing impacts of the pandemic have driven higher financial crime compliance costs to an estimated U.S. $19.2 million (AUD $27.6 million) for larger Australian financial institutions and has led to increased investments in both labor and technology.

Key findings from the 2022 True Cost of Compliance Study – The Australian Edition:

• Labor As a Driver of Increased Compliance Costs: More than two-thirds of financial institutions surveyed indicated they had increased compliance staff since 2019. Labor and training accounted for 54% of average compliance costs while technology, including adding or maintaining networking or systems that support remote working during the pandemic, accounted for 41% of costs.
• Using Technology to Solve Compliance Challenges: Large financial institutions that invested in technology solutions to support financial crime compliance efforts experienced less severe impacts on cost and compliance operations (almost U.S. $17.5M or AUD $25 million per annum), greater efficiencies and fewer pandemic-related challenges. Those that spent less than the industry average on technology spent an average of U.S $18.9M (AUD $28.7 million) on annual financial crime compliance costs.
• Increased Exposure to a Range of Financial Crimes: Money mules and financial crimes involving digital payments are increased and contributed largely to rising financial crime compliance costs. Respondents reported increased exposure to trade-based money laundering (TBML), third-party fraud (supply chain corruption, professional advisors), proceeds of trafficking and the criminal use of new technologies and methods, including cryptocurrency.

“Ecommerce and retail were ranked highest as being of most risk for money laundering by Australian financial institutions,” said David Haynes, vice president at Lexis Nexis Risk Solutions. “Amidst the growing regulatory pressures and evolving threats, retailers and ecommerce merchants should be prepared for increased costs brought by the digital transformation.”

Methodology

The True Cost of Compliance APAC study surveyed 253 banks, investment, asset management and insurance firms’ decision makers within the financial crime function across Australia, China, India, Japan and Malaysia. Organizations represented banks and investment, asset management and insurance firms.

Download the report.

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