Fraudulent Trends experienced during the COVID-19 outbreak

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September 18, 2019

COVID-19 was a curve ball that was not anticipated by most businesses.  Overall there was a global shift to more Internet activity, ranging from a sharp increase in e-commerce to a strong influx of new depositing clients (signups) and gambling action on remote gaming platforms.  Lockdown restrictions and imposed quarantine periods had their toll on persons’ psychological wellbeing and time management at large.

From day-to-day client work we noticed the following emerging trends during these weeks of crisis.

 

Identity Cloning

We found and blocked users attempting to impersonate another person, to hide their real identity.  By collecting official identity documentation, such as identity cards, passports and driving licences, we could check them against official international datasets to verify their legitimacy.

 

Fake Addresses

An increase in the number of registrations using fake addresses was experienced during these coronavirus times.  By carrying meticulous proof of address checks we establish if a new registrant is using an actual address or a fictitious or invented physical address.  A possible driving factor behind use of fake addresses during onboarding, might be users trying to achieve an additional level of anonymity.

 

Minors acting as adults

Different jurisdictions and their respective regulatory frameworks stipulate legal ages for various service signups.  A practical example is the legal age for a user to get onboard an online casino and manage to gamble online.  A spike in the number of minors trying to circumvent the age-check step in the registration phase during onboarding was experienced.  The most common tactic used was the uploading of fake or manipulated identity cards together with incorrect dates of birth.

 

Launderers tentative Infiltration

Launderers increasingly tried to infiltrate online merchants and operators during this period of economic instability.  With cutting-edge AML and CTF checks, sources of funds and sources of wealth of clients during onboarding and (also of utmost importance) on ongoing basis (for existing clients) was carried out to verify the origin of funds being deposited and placed in online regulated operators.  Launderers might try to take advantage of this precarious economic (monetary) situation to clean funds coming from illicit activities like drug and arms dealing and prostitution circles.  Some regulatory bodies have lately introduced affordability checks – wherein we check deposits against the affordability profile of that specific client.

 

Bonus Fraud

This is a very common scenario which wastes a lot of precious time and effort of online operators, mostly in the remote gambling sector.  Imagine the same person signing up (possibly multiple times) as a different person using, among other things, a different email address.  Our multi-lingual team supplement our technology-based solutions to ensure that players are ‘real life persons’ using official documents, namely: identity cards, driving licences and passports.  The reason for this type of fraud is lack of funds at players’ end or lack of willingness to spend real money on iGaming platforms.

 

Synthetic Identity thefts became more and more sophisticated

In this instance fraudsters use a mix of fake and real information to make the identity look as real as possible.  Common examples would include a stolen identity card number with a fake image or an invented date of birth.

Early detection of fraudulent behaviour will minimise cost for any regulated business.  By integrating QGen in your onboarding process, you will be protecting your brand from fines, reputational damage and possible issues with your invaluable operating licence.

On the other hand it is important for end users to beware of online scams, phishing attempts and bogus offers, which try to exploit people’s fears, anxiety and uncertainties brought about with the COVID-19 outbreak.

 

Do not let higher sign-up volumes compromise your compliance function.  QGen Group can offer expert KYC and KYB managed services at cost-efficient rates.  Learn more: info@qgengroup.com

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