As fraud becomes more prevalent and organized, the need for an overarching solution to identify fraud patterns has grown. However, many financial institutions have been hesitant to share customer data due to compliance and privacy concerns.
Privacy-enhancing technologies (PETs) could help address these challenges. PETs enable organizations to share information across the industry while protecting personal data through pseudonymized or tokenized identifiers.
Two of the main use cases for this approach include detecting mule accounts and synthetic identities. Taken in a single instance, an account that is opened with seemingly legitimate credentials may not raise red flags. However, if the same synthetic identity is used to open accounts at multiple institutions within a short period, PETs could help identify the suspicious activity and enable timely intervention.
The Spiraling Scale of Fraud
The proliferation of fraud vectors has reached a point where financial institutions are facing significant impacts.
For example, organized criminal rings now recruit money mules through social media and other channels, exploiting a company’s already-verified customers to perform nefarious activities. While this may appear to be an isolated event, mule activity rarely occurs in isolation.
Indeed, such activity often happens on a large scale—so much so that criminal syndicates often use a “mule-herder” to manage the many mules and their accounts.
The Teeming Dark Web
This scale, amplified by sophisticated technologies like AI, has prompted more calls for a consortium approach to fraud prevention. A cyber fusion strategy is built on cooperation among financial institutions—sharing data and pooling resources to create fraud and money laundering defenses.
In addition to data sharing, a cyber fusion strategy should also include dark web threat intelligence. The dark web teems with consumer data, much of it stolen through pernicious malware like infostealers.
Dark web threat intelligence not only scours this data to find connections, but also extracts information from cybercriminal communications in forums and chat channels. These capabilities are essential for uncovering connections between bad actors, enabling authorities to properly attribute attacks and dismantle cybercriminal rings.
A cyber fusion strategy that incorporates PETs for secure data-sharing—combined with dark web threat intelligence—gives financial institutions their best chance to combat evolving fraud threats.
