Protecting Financial Institutions Against Identity Theft

In the lag between a data breach and its discovery, fraudsters can wreak considerable damage through identity theft. Armed with stolen personally identifiable information, they can carry out identity crimes unhindered, withdrawing funds fraudulently, applying for credit and laundering money.

When malicious actors gain access to sensitive data, such as bank account numbers, passwords and tax file numbers, they often have the benefit of time on their side. The average time it takes to identify or report a data breach is 277 days¹ - roughly nine months. 
This is time enough for identity fraudsters to exploit stolen data to pass through identity verification and onboarding processes and appear as a genuine customer of financial institutions.

Australian Bureau of Statistics² data for the five years prior to 2021-22 reveals that 56% of reported identity theft victims had money taken from their bank accounts, superannuation, investments or shares, while 16% experienced new accounts opened, including phone and utilities. In 8% of cases, identity fraudsters applied for loans. 

Identity takeover fraud

Identity takeover is a concerning form of identity fraud because it enables fraudsters to circumvent identity verification processes using pilfered personal information. Once criminals gain access to victim identities and create or access accounts, the costs for financial institutions rise with each transaction. 

Synthetic identity theft takes this a step further, requiring minimal personal information to construct a false profile or replica identity to commit financial crimes. With no legitimate victim to detect irregular account activity, this form of identity theft can remain undetected for extended periods while criminals siphon or launder substantial sums of money.

With data breaches increasing the risk of identity takeover fraud in financial institutions, Equifax has acted swiftly to enhance its fraud protections and support the market. Our early alert fraud detection solution now has an expanded capability to provide greater protection in flagging the potential existence of a fraudster in the early days after a data breach. 

Equifax ID Takeover Alert monitors ID verification attempts within the Equifax ecosystem for fraudulent patterns including fluctuations and frequency. Multiple verification attempts or subtle detail changes signal potential identity fraud or money laundering risk. This solution is available through IDMatrix and allows customisation of the pattern matching algorithm according to an organisation’s risk and operational efficiency framework. 

For financial institutions looking to protect against identity crime and money laundering, consider these four components when selecting an early fraud detection solution. 

1. Data quality for accurate alerts 

An alert tool must have a comprehensive view of identity onboarding events to spot anomalies in verifications effectively. Incomplete identity data that does not cover a broad range of institutions or industry sectors can result in missed suspicious activity or high false-negative rates. 

IDMatrix, as one of Australia's leading ID verification and fraud platform, conducts an extensive number of verifications across various sectors, including banking, finance, gaming, telco and remittance services. With fraudsters using the same stolen identity data across multiple lenders and financial products, this substantial customer base ensures a wide net can be cast for spotting suspicious activity. The Equifax ID Takeover Alert monitors identity verifications performed across the entirety of the IDMatrix platform.

2. Real-time detection for swift action

Identity thieves work quickly across multiple financial institutions before the victim knows about the data breach. This emphasises the importance of real-time detection to flag fraudulent activities before they escalate. 

3. Seamless integration with existing fraud detection processes

Detecting fraud requires a vast arsenal of solutions. Introducing a new tool requires seamless integration with existing processes without compromising operations or the customer experience.

4. Maturity of identity verification platform

As fraudsters grow more technologically sophisticated, choose a trusted and mature identity verification platform with a rich history of fraud prevention intelligence. 'Know your customer' and get to ‘Trust your customer’ by seeking a partner and platform with comprehensive capabilities to provide you with a single view of risk of an individual.

 
ID Takeover Alert is a valuable addition to the IDMatrix toolbox, to be used in conjunction with other measures like email risk, device intelligence, document verification and biometrics. The key to effective fraud prevention is layering multiple solutions to close the gaps exploited by fraudsters.

Check out this Infographic to get a summarised overview of how ID Takeover Alert can help protect your business.

With over 50 years of industry experience, Equifax combines differentiated data, advanced analytics and cloud technology to improve fraud detection with a layered, multi-pronged approach.

Contact Equifax today to explore our comprehensive fraud and identity solutions.

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¹  IBM Cost of Data Breach Report 2023

²  Personal Fraud, ABS Key statistics