Synthetic Identity Fraud

Synthetic identity fraud occurs when criminals fabricate identities by combining real and fake information, such as valid Social Security numbers with fictitious names and addresses. Unlike traditional identity theft, synthetic identities do not belong to real individuals, making them harder to detect. Fraudsters use these identities to open accounts, build credit, and eventually default on loans or payments.Financial institutions face significant exposure as synthetic identities can remain undetected for years, passing standard KYC checks. Detection requires cross-referencing multiple data sources, monitoring behavioral anomalies, and applying advanced analytics to identify inconsistencies. Regulators expect banks and fintechs to implement controls that detect synthetic fraud during onboarding and throughout the customer lifecycle. Effective prevention combines document verification, biometric checks, device intelligence, and continuous monitoring to identify fabricated profiles before losses occur.