Picture this: A bank receives a video call from what appears to be a high-net-worth client requesting an urgent wire transfer. The voice is familiar, the face is recognisable, and the mannerisms match perfectly. The bank authorises the transaction. Days later, they discover the real client never made the call—they’ve fallen victim to deepfake technology, the latest weapon in financial criminals’ increasingly sophisticated arsenal.
This scenario isn’t science fiction. It’s the new reality that financial institutions and compliance professionals must prepare for as deepfake technology becomes more accessible and convincing.
What is Deepfake Technology?
Deepfake technology represents a convergence of “deep learning” and “fake”—artificial intelligence systems capable of creating convincing fake images, videos, and audio recordings. This sophisticated AI can transform existing content by swapping one person for another or create entirely original content showing someone doing or saying things they never actually did.
The technology works by analysing thousands of images or hours of audio from a target individual, learning their facial expressions, voice patterns, and mannerisms. The AI then applies this learning to create new content that appears authentic to the human eye and ear.
Whilst deepfakes have legitimate applications—from entertainment and video game audio to customer support systems—their potential for criminal exploitation poses unprecedented challenges for financial crime prevention.
The Rise of ‘Frankenstein Fraud’
2024 marked a significant escalation in synthetic media attacks against financial institutions. Perhaps most concerning is the emergence of “Frankenstein Fraud”—a technique where criminals layer deepfake technology with genuine personal information from unsuspecting victims to construct completely fictitious identities.
This sophisticated approach combines:
- Genuine personal data obtained through data breaches or social engineering
- Synthetic biometric data created using deepfake technology
- Fabricated supporting documents that appear legitimate
- Convincing backstories built from real social media profiles
The result is an identity that passes traditional verification methods whilst being entirely false—a perfect storm for financial fraud.
Real-World Applications and Threats
The implications of deepfake technology extend far beyond theoretical concerns. We’ve already witnessed its deployment in high-stakes scenarios, such as the Russian-created deepfake video purporting to show Ukrainian President Volodymyr Zelenskyy instructing his troops to surrender—demonstrating the technology’s potential to influence major geopolitical events.
In financial services, deepfakes present multiple attack vectors:
Account Opening Fraud: Criminals use synthetic identities backed by deepfake verification videos to open accounts with false credentials.
Authorised Push Payment Fraud: Voice deepfakes impersonate executives or family members to authorise fraudulent transfers.
Remote Onboarding Exploitation: Video deepfakes bypass identity verification processes during digital account opening.
Social Engineering: Audio deepfakes enable convincing impersonation of trusted individuals to extract sensitive information.
The Technology Behind the Threat
Modern deepfake creation has become alarmingly accessible. What once required extensive technical expertise and substantial computing power can now be accomplished using consumer-grade software and relatively modest hardware.
Advanced deepfake systems can:
- Generate realistic facial movements and expressions
- Synchronise lip movements with artificial speech
- Replicate voice patterns with minimal source material
- Create convincing body language and gestures
- Maintain consistency across extended video sequences
The barrier to entry continues to fall as the technology improves, making deepfake creation possible for increasingly unsophisticated criminals.
Current Detection Challenges
Traditional fraud detection systems struggle against deepfake attacks because they rely on biometric verification methods that deepfakes are specifically designed to fool. Current challenges include:
Biometric System Vulnerabilities: Many identity verification systems cannot distinguish between genuine and synthetic biometric data.
Evolving Quality: As deepfake technology improves, detection becomes increasingly difficult, even for trained professionals.
Real-Time Limitations: Live video calls present particular challenges, as real-time deepfake detection requires immediate analysis.
Scale Problems: Manual verification becomes impractical when dealing with large volumes of customer interactions.
Preparing Your Organisation for the Deepfake Era
Financial institutions cannot afford to wait for regulatory guidance—proactive measures are essential:
Enhanced Due Diligence: Implement additional verification layers that go beyond traditional biometric checks, including behavioural analysis and knowledge-based authentication.
Multi-Modal Verification: Combine multiple verification methods—voice, facial recognition, and document analysis—to create a more robust defence.
Staff Training: Educate employees about deepfake threats and establish protocols for handling suspicious authentication attempts.
Technology Investment: Deploy advanced AI detection tools specifically designed to identify synthetic media, though recognising these tools must evolve alongside the threat.
Process Redesign: Review and strengthen customer authentication processes, particularly for high-value transactions and account changes.
The Regulatory Response
Whilst specific deepfake regulations remain limited, existing financial crime prevention requirements still apply. Institutions must demonstrate they’ve taken reasonable steps to prevent fraud, including adapting to emerging threats like deepfakes.
Key regulatory considerations include:
- Customer Due Diligence obligations extend to ensuring the authenticity of verification materials
- Suspicious Activity Reporting may be required when deepfake fraud is suspected
- Data protection compliance becomes more complex when dealing with synthetic personal data
Future Implications for Financial Crime
Experts predict deepfake technology will become more prevalent and sophisticated in coming years. This evolution presents several concerning trends:
Increased Accessibility: Deepfake creation tools continue to become more user-friendly and widely available.
Improved Quality: Technical advances make detection increasingly challenging, even for specialists.
Targeted Attacks: Criminals are likely to focus on high-value targets where the investment in sophisticated deepfakes generates substantial returns.
Regulatory Lag: Legal frameworks struggle to keep pace with technological advancement, creating compliance uncertainty.
Building Resilience Against Synthetic Media Threats
The deepfake threat requires a fundamental shift in how financial institutions approach identity verification and fraud prevention. Organisations must balance security enhancements with customer experience, implementing robust defences without creating unreasonable barriers to legitimate customers.
Success requires a multi-layered approach combining technological solutions, process improvements, staff training, and ongoing adaptation as the threat landscape evolves. Don’t wait for the first deepfake attack to expose vulnerabilities in your systems. Start building your defences today. Contact CompFidus for expert guidance on strengthening your fraud prevention systems against emerging AI-powered financial crimes.