By Kirsten Dean
Published September 2, 2022
As insurance, banking, retail, telco and gaming sectors grapple with how to protect themselves against losses from fraud, experts warn that the use of fraudulent documents is unlikely to slow down as ongoing digitalisation means the opportunities for fraudsters and money launderers are only likely to increase.
MoData, a digital and financial solutions specialist based in South Africa but operating across Africa says its Artificial Intelligence (AI)-Powered Document-Forgery Detection system can be used in protecting organisations against fraudsters.
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MoData draws a line between sophisticated forgery that it refers to as ‘deepflakes’ and the not-so-complicated version it calls ‘shallowflakes’.
While deepfakes require AI to create realistic but synthetic still or video images or voice recordings, MoData says, shallowfakes can be created easily and quickly using regular software, such as PhotoShop.
“The accessibility of tools to modify documents–from IDs, utility bills and bank statements through to photographs, contracts, invoices, purchase orders and salary slips–means that it is becoming easy for fraudsters to make changes to documents and images at speed and on scale,” says Clive Gungudoo, MoData’s Director of Financial Crimes and Risk Management.
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Why the rise in shallowfakes?
“Numerous factors have contributed to the rise in document fraud, particularly the increase in self-service automation,” says Gungudoo, a fraud and cybercrimes thought leader. “With the digitalisation of the insurance and banking industries, hard copies of documents are rarely required as organisations now rely on existing and new customers to either send digital documents and images via email, or to upload them themselves using the organisation’s online portals. The COVID-19 pandemic accelerated self-service across many industries through necessity, and customer on-boarding is now largely done online rather than in person.”
This significantly increases the opportunities for fraudsters to alter and manipulate documents digitally prior to uploading them. These fraudsters tend to use ‘synthetic identities’ – a mix of fake, stolen or data-breached personally identifiable information (PII) that check out with third party data sources.
“This modus operandi sees criminals using ‘mules’–real people with real identities–to bypass secure biometric and identity verification during remote onboarding and account opening,” says Gungudoo. “The uploaded digital documents are generally not checked during the automated online processes, allowing fraudsters and money launderers to get through the compliance gates.”
He says the cost-of-living crisis also plays a big part in the rise of opportunistic fraud.
“Simply put, when people are under financial pressure, they are more likely to tamper with invoices and supporting documents to, for example, inflate an insurance claim or to secure loans and financing. In personal or business circumstances, they might operate with complete fraudulent intent and falsify electronic bank proof of payment advice in exchange for goods and services, a tactic also used by large-scale fraudsters,” explains Clive. “Similarly, opportunistic occupational fraud is increasing. Often in these cases procurement invoices are forged, amounts are inflated, and payments are made to personal accounts of staff or family members.”
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Gungudoo says that in large-scale fraud operations, document forgery is prolific, particularly in relation to invoice redirect scams and business email compromise (BEC) fraud.
“In these cases, fraudsters intercept invoices and change the banking details before they are sent for payment processing. The electronic payment then ends up in mule accounts controlled by the fraudsters.”
So how can AI be used in detecting shallowfakes?
Traditionally, document authenticity checks have been conducted manually, but the subtlety of shallowfake alterations is not easy to detect with the naked eye.This is where AI-powered detection comes in.
While AI is not needed to create shallowfakes, Gungudoo explains, it is extremely useful in detecting them.
MoData says its AI-powered Document Authenticity solution means documents are automatically scanned on submission, picking up alterations to images and documents in just three seconds – virtually real time. Acceptance or the red flagging of documents, including PDFs, JPEGs, PNGs and TIFFs, is automated, saving both time and resources.
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“Document forensics is also able to detect forgery patterns across documents, thwarting tech-savvy fraudsters who might be manipulating the same document several times or using sophisticated templates,” says Clive Gungudoo. “AI Document Authenticity technology is optimised for high precision and accuracy and is a vital aid in both the identification of and the defence against shallowfakes – plus it means document processing can be fast, efficient and secure. With a 99.99% accuracy rate for automated approval of trusted documents, the need for manual reviews is minimised.”
The cost of inaction in the fight against document fraud is high, with organisations facing huge financial losses, as well as reputational damage. This, Gungudoo reiterates, makes AI-powered document-fraud detection both a necessary and cost-effective defence against fraudsters;it is essential to have it in place to future-proof your business.
