Manufactured Identity Fraud in Banking

A seasoned banker, Julio M. Herrera Velutini serves as chairman of the board of an international bank headquartered in Puerto Rico. Julio Herrera Velutini is well aware of the many security threats the banking industry is facing and takes steps to ensure that his bank will meet these challenges and continue to prosper.

With the banking industry continuing its advancement in electronic product origination, a new threat is emerging in the form of manufactured identity fraud. Previously only witnessed in the credit card industry, people are now fabricating new identities by creating totally false information or by combining real and fake information. The ability to open a deposit or loan origination via the Internet has enabled scammers to open electronic accounts that evade the usual security scrutiny.

Banks often do not recognize something is amiss until suspicious activity occurs, after which they pursue individuals who do not actually exist. This kind of fraud has cost banks billions of dollars. Now banks must refine their methods of identifying fake customers from the real ones while striving not to degrade the benefits that customers have come to count on through digital banking.