New Account Fraud Prevention for Banks uses stolen or fabricated identities to exploit banks’ weaknesses during the onboarding process. When it comes to preventing new account fraud, it’s essential to deploy extra precautions and avoid turning away legitimate customers. New account fraud detection is a critical component of an institution’s overall anti-money laundering (AML) and counter-terrorist financing (CTF) efforts.

Preventing new account fraud requires a proactive approach to identity verification and continuous monitoring, leveraging technologies like facial comparison, digital document and ID verification, and behavioral analytics. This includes examining new accounts for suspicious activity such as high transfers in and out beyond salary data, dormant-to-warmed-up accounts, and a sudden spike in in/out activity around key times such as weekends or holidays, when fewer staff are monitoring the account.

Enhancing Security: New Account Fraud Prevention for Banks

However, implementing such rigorous verification processes during the application stage can cause friction and drive away legitimate potential customers. If a financial institution creates unnecessary hoops for its customers, they will find it easier to work with competing institutions. Moreover, verifying each applicant’s identity information against third-party sources can be costly. This is particularly true when a shopper uses a fake or compromised identity, or if they provide information that can be easily altered, such as a temporary/disposable email address or virtual SIM phone number. This can lead to costly false positives and slow down onboarding. A no-code solution that is quick to implement and provides continuous updates is key to addressing this challenge.

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