AI-enabled Digital Identity Fraud

You ever felt there’s a certain trend happening? Every Bob and Larry asking about it one way or the other. These past two weeks, I have seen countless business owners, asking for a solution to address the rise of identity fraud.

Why now? What’s the problem? And what can we do about it?

Let me explain.

AI-enabled technology does wonders. Swipe down to meet Sarah. She is a Canadian citizen (or so says her passport). She also does not exist.

Sarah, or more precisely folks who created Sarah, need to obfuscate the money trail, and blend the ill-gotten funds into the financial system. They pick a wealth management app and cross their fingers they’ll slip through onboarding unnoticed.

Hello, identity verification.

Pre-AI, things were somewhat more straightforward. Onboard as many clients as possible. Make sure the process is user-friendly, so that the clients actually stay through the whole process without losing their mind, when being asked to twist and turn their heads in four different directions.

Worst thing that can happen?

High customer onboarding churn rate. But that’s about it.

What happens now?

Business owners are in a bit of a pickle. And that’s an understatement. It feels to me there’s been a spike in AI-generated identification documents. So now, the business owners care not only about the user experience, but whether the document itself is real or not.

Fortunately, there are solutions to address this. But that’s a story for another time. Below are my three high-level takeaways.

1. Do not ignore the problem.

   Fraudsters like “Sarah” aren’t just testing your systems — they’re already inside. Pretending it’s not happening won’t make it go away.

2. Talk to your peers.
   You’re not alone. Everyone’s grappling with this. If you’re not already exchanging notes with others in your space, now’s the time.

3. Don’t reinvent the wheel.
   There are plenty of tools — from identity verification to advanced liveness checks — that are already built to handle this. Shop smart, plug them in, and stay one step ahead.