Research by Sumsub, a global verification platform with more than 1-billion identities on its database, shows an alarming surge of fraud networks across multiple regions.
According to the research, every 100th user of a digital platform or service globally was a member of a fraud ring in 2023.
Fraud networks, or fraud rings, are groups of individuals – operating globally or within the same location – who jointly participate in fraudulent activities such as multi-accounting, money laundering, money muling, personal data breaches and more. They collaborate to take advantage of a digital platform like a crypto exchange, fintech app, dating service, or online casino.
Fraud networks are found not only in growing markets like Bangladesh (10,2% of all users), Thailand (6,6%) or Vietnam (3,7%), but also in developed countries such as Singapore (2,8%), Portugal (1,3%) and Spain (1%).
More “leaders” of fraud rings are found pro rata among users in Oman (7,2%), China (4,6%), Hong Kong (2,9%), Kenya (2,8%), and Indonesia (2,2%). The US and the UK had a much smaller instances of fraud rings at just 0,2% – at the same level as the UAE.
In Africa, the overall regional fraud networks involvement ratio is 0,9%, with differences across countries. While Kenya shows the highest proportion – every 35th user there is in a fraud ring – many countries still exceed the global average: Benin (1,8%), Angola (1,7%), Uganda (1,6%), Ghana (1,3%), Nigeria (1,2%) and South Africa (1,1%).
Several countries in the MEA region demonstrate relatively low rates of fraud networks, such as Egypt (0,4%), Algeria (0,2%), Ethiopia (0,6%), Morocco (0,5%) and Saudi Arabia (0,3%).
“We’ve detected fraud networks ranging from three to over 750 users,” says Pavel Goldman-Kalaydin, head of AI/ML at Sumsub. “In one case, a group of several dozen crypto exchange applicants in Estonia raised suspicion by uploading identical Proof of Address documents from an unlicenced foreign bank. This revealed potential attempts to issue many crypto cards to the same address.
“This is just one case of how serial fraud operates – other instances include money muling schemes, tech support scams, ransomware and phishing attacks, and account takeovers.
“Fraud networks, however small they may seem right now, will gain prominence, just like AI-powered deepfakes,” he adds. “The damage of fraud rings is much more significant than that of individual scammers. Businesses must be prepared for this and protect their platforms in advance.”
To help companies counter these attacks, Sumsub revamped its anti-fraud technologies and launched a comprehensive Fraud Prevention Solution.