FinCEN Issues Urgent Alert

Deepfakes are not a new phenomenon, but their increasing use in sophisticated fraud schemes has prompted the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to issue a critical alert. This development underscores a troubling rise in incidents where generative AI-powered deepfakes are being weaponized against financial institutions and their customers. The alert serves as a stark reminder: deepfakes are becoming more pervasive, with significant implications for the security of the financial sector. 

A Significant Increase in Deepfake-Enabled Fraud 

FinCEN’s alert, “FIN-2024-Alert004,” reflects a marked rise in reports of deepfake-related fraud. The network has observed a spike in suspicious activity reports that highlight criminals’ growing reliance on synthetic media to manipulate identity verification and circumvent security protocols. FinCEN warns that “criminals have used GenAI to create falsified documents, photographs, and videos to bypass financial institutions’ customer identification and verification controls.” This escalation has made deepfake-enabled fraud an urgent priority for industry leaders. 

Deepfake Fraud Schemes on the Rise 

The alert details how deepfakes are increasingly being used to exploit weaknesses in identity verification and transaction processes. Among the most concerning tactics are: 

• Synthetic Identities and Document Manipulation: Fraudsters are leveraging generative AI tools to create hyper-realistic but fake identity documents, often combining stolen or fabricated personal identifiable information (PII). These fraudulent identities are then used to open bank accounts, launder money, and execute scams at scale. 

• Business Email Compromise (BEC): Deepfake technology is enabling impersonation schemes with a new level of sophistication, deceiving employees into authorizing large financial transfers. 

• Social Engineering Scams: Criminals use deepfakes to manipulate or impersonate trusted individuals, including executives and family members, in scams designed to extract sensitive information or funds. 

Why This Matters Now 

While deepfake threats have existed for some time, FinCEN’s alert highlights that the situation has reached a critical tipping point. Generative AI tools are becoming more accessible and capable, reducing the cost and time needed to create convincing forgeries. FinCEN notes that these tools can “produce synthetic content that is difficult to distinguish from human-generated outputs,” making traditional defenses less effective. 

Red Flags and Detection Strategies 

To help financial institutions mitigate the growing risks, FinCEN’s alert outlines key red flags to identify potential deepfake-driven fraud: 

• Inconsistencies in Customer Documents: FinCEN cites cases where a “customer’s photo is internally inconsistent or does not match other identifying information,” suggesting possible tampering. 

• Irregular Behavior During Verification Processes: Criminals may attempt to avoid live verification checks, citing technical issues, or use plugins to present pre-recorded deepfake content. 

• Suspicious Account Activity: Rapid transactions, payments to high-risk entities, and account behaviors inconsistent with the customer’s profile are strong indicators. 

Steps Financial Institutions Can Take 

FinCEN emphasizes a multifaceted approach to counter the rising threat of deepfake-enabled fraud. Recommended strategies include: 

• Adopting Enhanced Authentication Methods: Multifactor authentication (MFA), especially phishing-resistant MFA and live verification checks, can help expose fraudulent attempts. 

• Leveraging AI-Driven Detection Tools: Advanced software capable of identifying inconsistencies in images, videos, and other media can aid in catching deepfake forgeries early. 

• Promoting Cross-Industry Collaboration: Sharing intelligence and best practices across the financial industry is critical to staying ahead of rapidly evolving fraud tactics. 

An Urgent Call to Action 

The FinCEN alert serves as a clarion call for financial institutions to strengthen their defenses and stay vigilant. As highlighted, “the potential for deepfake media to be used in fraud schemes is one of several risks associated with emerging GenAI technologies.” By proactively investing in advanced fraud detection technologies, enhancing customer awareness, and collaborating with peers, the financial sector can better protect itself against this growing threat. 

At Incode, we are committed to supporting financial institutions with cutting-edge identity verification solutions tailored to address the evolving challenges posed by deepfake-enabled fraud. Our AI-driven solutions empower organizations to detect and prevent sophisticated fraud attempts, ensuring a secure and trustworthy financial ecosystem. 

Ready to strengthen your defenses against financial crime? Partner with Incode to implement robust identity verification solutions and secure your business with our integrated identity platform.  Contact us today to learn more. 

Read the full FinCEN alert here.