Fraud trends to pay attention to in 2023

Biggest fintech fraud and risk trends to monitor in 2023

The world of financial technology, or fintech, has seen explosive growth in recent years. As more businesses, consumers, and governments have adopted digital financial services, the potential for fraud has also grown. This means that, as we move into 2023, it is important to be aware of the latest trends in fintech fraud.

Artificial Intelligence and Machine Learning

One of the biggest trends in fintech fraud over the next few years will be the use of artificial intelligence (AI) and machine learning (ML) to perpetuate fraud. AI/ML can be leveraged for fraud in a number of ways:

  • Fake identity: AI can be used to generate fake user identities to open fraudulent accounts, manipulate existing accounts, or commit money laundering. These synthetic identities can be difficult to detect because AI systems are able to generate very credible looking data.
  • Verification evasion: As machine learning improves, savvy fraudsters can increasingly detect and evade complex fraud detection checks. Sophisticated fraudsters are trying to bypass even biometrics checks and CAPTCHA verification.
  • Copying real users: AI/ML fraudsters can also identify patterns in user behavior in order to mimic that behavior to initiate fraudulent transactions while remaining undetected.

Synthetic identity theft

On that note, synthetic identity theft is also rapidly growing. This involves criminals using a combination of real and false information to create a new identity. This identity is then used to open new accounts and obtain credit and other services. Synthetic identity theft is more difficult to detect than traditional identity theft because it relies on stolen data, combined with falsified data, to create a seemingly legitimate identity. One of the most common ways to commit synthetic identity theft is by using a stolen Social Security number and combining it with a false name and address. This creates a synthetic identity that can be used to open new accounts, apply for credit cards, and even receive government benefits. The financial losses associated with synthetic identity theft can be substantial. According to some estimates, the total cost of synthetic identity theft in the United States is estimated to be between $2 billion and $3 billion per year.

Cryptocurrency fraud

Cryptocurrency is a form of digital currency that continues to grow in popularity, but unfortunately, it is also becoming a target for fraudsters. This can manifest in a number of ways:

  • Covert transactions: Criminals executing illicit exchanges involving prohibited content or money laundering will conduct transactions using cryptocurrency to hide their identity and avoid being traced by traditional fiat systems.
  • Pump and dump schemes: This is when a fraudster promotes a particular cryptocurrency in order to drive up its price. They will promise huge returns on investments or access to “exclusive” deals or “insider” information. Unfortunately, these promises are often nothing more than empty words. Once the price has been inflated, the fraudster then sells the coins for a profit. This type of fraud is especially dangerous because the coins can lose their value quickly.

Social engineering fraud

Another popular vector for fraud to pay attention to in 2023 is social engineering. This is when fraudsters use psychological manipulation to gain access to confidential information or assets. For example, a fraudster can pretend to be a vendor offering services to your company and send employees fake invoices for fake services that they hope unsuspecting victims will just pay. Social engineering fraudsters are constantly adapting and developing new and creative ways to gain access to valuable information.


Malware fraud is a type of cybercrime that involves the use of malicious software to steal confidential information or disrupt the normal functioning of computer systems. It is typically used to gain access to financial information, passwords, and other sensitive data. In addition to its financial implications, malware fraud can also damage a company’s reputation and lead to significant losses in customer trust.

As technology continues to evolve, so too do the tactics used by malicious actors to perpetrate malware fraud. In 2023, malware fraud trends are expected to include more sophisticated methods of infiltration, such as artificial intelligence-driven automation to launch targeted attacks on organizations with weaker cyber security systems. Furthermore, due to the increasing prevalence of cloud computing and the Internet of Things (IoT), malware fraudsters will also likely take advantage of vulnerabilities in connected devices to launch malicious attacks. This kind of attack is particularly dangerous as it can allow malicious actors to access confidential information or cause significant disruption to the victim’s systems.

Money Laundering

Money laundering continues to be top of mind. Money laundering is when criminals hide the source of their funds by moving them through a series of accounts. The use of digital payments and cryptocurrencies are expected to be major money laundering fraud trends in 2023. The popularity of these payment methods means that criminals have more opportunities to use them to conceal their identities, move their funds, and launder money. It is also becoming more common for criminals to use offshore accounts and shell companies to hide their activities and launder money. These businesses are often difficult to trace and it can be difficult to determine who owns them.

Another trend that is expected to continue in 2023 is the rise of money mules. Money mules are people who act as intermediaries between criminals and financial institutions. They are often recruited through online job postings and are promised large sums of money for their services. They are then used by criminals to transfer money around the world, which makes it difficult for authorities to detect and trace the money laundering activities.


Finally, phishing attacks are expected to continue to be a common form of fintech fraud. Phishing attacks involve sending emails or other messages that appear to be from a legitimate source, such as a bank, but are actually from a malicious actor. These messages often contain malicious links or attachments, which can be used to steal login credentials or other sensitive information.

How to prepare

In the era of constantly changing fraud trends, how can you best protect yourself? Some of the top ways you can counteract these behaviors and protect yourself include:

Enforce identity checks: To protect yourself against identity fraud, make sure to enforce solid identity verification checks on your platform. This can include asking users for identification documents, enforcing 2-factor authentication, or biometric prompts to ensure your user is a real human. This helps you increase the number of legitimate users entering your platform and decrease the number of illegitimate users, which ultimately reduces the likelihood for abuse on your platform.

Security program and training: To protect yourself against malware, phishing, social engineering and more, make sure to work with your company's IT department to enforce security best practices. Businesses and organizations must stay vigilant and ensure that their cyber security systems are up to date. This includes implementing multi-factor authentication, regularly patching vulnerable systems, and monitoring for suspicious activity on their networks.  In addition, it's important to train everyone at your company on security basics such as identifying red flags and malicious download links in phishing emails and double checking requests for sensitive information or money transfers.

Stay up to date on industry news: Fraudsters will often exploit the same attack on multiple companies until the tactic is exhausted. Thus, analysts should regularly stay updated with news sources, other fraud analysts, law enforcement, and industry professionals to stay informed of any new attacks or developments. Fraud fighters can also band together to share network information and intelligence to better detect fraudulent behavior. If you'd like to join a active community of industry leaders in Fraud & Risk, you can apply for the Trust Operators community here.

Ongoing monitoring: Finally, you should constantly be monitoring customer activity for suspicious behaviors such as unusual spending patterns, fishy communications, or changes in contact information. Automated monitoring software such as LogicLoop can be configured to alert fraud analysts of potential threats, giving them the opportunity to take action and protect their customers.

By staying up to date on the latest trends, being proactive in identifying potential threats, and investing in the right tools, fraud fighters can stay one step ahead of the curve and keep our platforms safe. If you'd like to learn more about how to equip your platform with robust tooling and empower fraud analysts to quickly set up custom alerts on top of any company data without needing engineers, feel free to book a demo with LogicLoop today.

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