Beyond KYC: Unmasking the Future of Fraud Prevention

Beyond KYC: Unmasking the Future of Fraud Prevention

by November 30, 2023

Fraud prevention has become an increasingly crucial concern in Singapore’s ever-evolving financial technology and banking landscape.

As the country continues establishing itself as a leading hub for financial innovation, the need for robust security measures has never been greater.

In a landscape where security is paramount, Sumsub is becoming the go-to solution for fraud prevention.

With a holistic approach that extends beyond the Know Your Customer (KYC) stage, Sumsub is setting new standards in safeguarding financial institutions.

The importance of fraud prevention beyond KYC

Penny ChaiFraud prevention

Penny Chai, Sumsub’s VP of Business Development for the APAC region

Fraud in the financial sector is a critical issue with far-reaching implications, necessitating vigilance beyond the initial KYC stage. Sumsub’s internal data indicates that over 70 percent of scams and fraudulent activities occur post-KYC globally, underscoring the need for continuous monitoring.

Penny Chai, Sumsub’s VP of Business Development for the APAC region, emphasised the company’s holistic approach to compliance and verification, which includes ongoing analysis of all aspects from the onboarding stage to transaction monitoring and reporting. This comprehensive strategy is critical to Sumsub’s mission to create a world where anyone can securely access and use any service.  By seamlessly integrating security measures, Sumsub’s full-cycle verification platform ensures a user-friendly experience, paving the way for a more accessible and secure digital landscape.

According to Penny, this involves thoroughly examining onboarded identities and continuous transaction monitoring to detect identity status and behavioural changes. This approach helps financial institutions maintain compliance and protect their reputations and customers’ assets.

Leveraging its extensive experience in identity verification dating back to 2015, Sumsub has developed robust AI and machine learning capabilities. With global data from over 14,000 document types across more than 220 countries, Sumsub stands as a reliable partner for businesses aiming to expand.

In July, Sumsub strategically established a presence in Singapore, which the company finds the decision pivotal for enhancing services to APAC customers and aligning operations with regional clients.

This proximity to its clients, expert consultation, and customisable solutions fortifies Sumsub’s position as a trusted ally in combating fraud in the region and fostering a secure, accessible, and innovative digital ecosystem.

Countering the rise of deepfakes

Deepfakes, the hyper-realistic manipulations of audio and video, have become a potent tool for fraudsters.

As Penny pointed out,  Sumsub’s recent “State of Verification and Monitoring in the Crypto Industry 2023” report reveals a 128 percent increase in deepfake incidents in the crypto industry, making it a significant concern for the industry.

Sumsub has implemented advanced strategies to protect Singaporean financial institutions from countering this growing threat.

Real-time monitoring during the onboarding process, including liveness detection, helps gather crucial data to thwart deepfake manipulation. The AI technology employed by Sumsub can identify deepfakes promptly, allowing compliance officers to take immediate action.

Penny elaborated, “We infuse our AI technology into liveness detection to pick up the deepfakes.” This real-time monitoring and detection system enables swift action to prevent fraud.

Addressing synthetic identity fraud

The financial sector faces a significant challenge from synthetic identity fraud, where criminals blend real and fake information to create false identities.

Sumsub addresses this issue with its enhanced deepfake detection solution, helping businesses ensure that no fraudster passes liveness checks. In October this year, Sumsub launched its free open-source module, “For Fake’s Sake,” designed to assist the AI community in its ongoing research for detecting deepfakes and synthetic fraud in visual assets. This tool represents an added defence against advanced fraud techniques.

Conceived and developed by Sumsub’s in-house AI and ML Research Lab, the open-source model consists of four unique machine learning models designed explicitly for deepfake and synthetic fraud detection. This tool enables users to assess the likelihood of an image being artificially generated.

Sumsub’s dedication to the AI community is evident in their approach. These models are the first of their kind developed by a verification provider. Penny noted that the company aims to contribute to the industry, highlighting its commitment to collaboration and innovation.

Through sharing its knowledge and resources, Sumsub improves its platform and contributes significantly to the worldwide fight against the increasing menace of deepfakes and synthetic identity fraud.

This open-source initiative reflects Sumsub’s broader mission to empower organisations and individuals in identifying and addressing these sophisticated forms of fraud.

The role of AI and machine learning in fraud prevention

The financial landscape is evolving rapidly, with the emergence of “fraud as a service” and “malware as a service.” To combat these sophisticated threats, AI must be harnessed effectively.

Sumsub’s use of AI and machine learning is a game-changer in fraud prevention. One notable feature is behavioural risk analysis, which enables the platform to identify subtle changes in a person’s behaviour and transaction patterns. 

For instance, it can flag unusual transactions for further investigation, such as when someone suddenly exhibits spending behaviour that deviates from their established profile.

Penny explained, “Sumsub’s AI and machine learning capabilities are not limited to historical data analysis. They incorporate real-time monitoring, adaptive algorithms, and behavioural risk analysis.”

This approach allows Sumsub’s platform to identify emerging patterns and detect anomalies in real-time, enabling compliance officers to take immediate action.

The continuous monitoring advantage

Traditional monitoring methods often focus on single data points at specific moments, leaving room for fraud to go undetected until it’s too late.

Penny highlighted the importance of continuous monitoring, stating, “This real-time vigilance enables swift intervention and prevents fraudulent actions from progressing.”

Continuous monitoring ensures that suspicious activities are flagged and addressed promptly, minimising the potential damage caused by fraudulent actions.

Education and awareness

Penny stressed that the fight against fraud extends beyond just the realm of advanced technology; it fundamentally hinges on education and awareness.

In a world where fraud tactics constantly evolve, the public and financial industry professionals must stay informed and vigilant.

Penny spoke of the significance of this dual approach. “Understanding the mechanisms behind scams and deep fakes is imperative,” she explained. “Educating people empowers them to protect themselves against fraudsters’ deceptive and harmful tactics. These fraudulent activities pose serious risks not only to individuals and organisations but also to the very fabric of our society.”

To demonstrate Sumsub’s commitment to this cause, Penny highlighted an innovative approach to raising awareness: “We’re often asked how we detect deepfakes in real-time. The answer isn’t straightforward, as it involves a range of solutions. To help people, we’ve developed an interactive game to grasp the complexity and sophistication of these fakes; this is where we can educate users on identifying deepfakes, making awareness engaging and accessible.”

Enhancing fraud prevention in Singapore

Sumsub’s approach to fraud prevention in Singapore’s fintech and BFSI sectors marks a shift from traditional KYC practices, focusing on newer methods like continuous transaction monitoring and detecting deepfakes and synthetic fraud.

This approach, leveraging advanced AI technology, reflects an evolving strategy for safeguarding the financial industry against emerging threats.

The company’s efforts extend to fostering education and awareness about fraud prevention.

By doing so, Sumsub equips individuals and organisations with the necessary tools and knowledge to counteract the increasingly sophisticated strategies employed by fraudsters.

As the nation’s financial sector continues to evolve, Sumsub’s commitment to proactive fraud prevention ensures that Singapore remains a secure and thriving hub for financial innovation.

Register to watch Sumsub’s webinar via this link and learn how organizations can reduce your exposure to fraud risks, with insights from industry experts.