Ondato Report Reveals Prevalence of Fake Documents in Crypto Identity Fraud

A recent report from Ondato, a compliance management firm specializing in Know Your Customer (KYC) and Anti-Money Laundering (AML) solutions, highlights that digital identity fraud in the crypto sector often involves the use of fake documents.

Key findings from Ondato’s Identity Fraud Report for the Crypto Industry 2023 include:

• 42 percent of criminals involved in crypto fraud utilize printed fake ID documents, with passports being the most commonly used (38 percent), followed by identity cards (36 percent), and driver’s licenses (26 percent).
• Other fraudulent methods involve document images from screens (31 percent) and manipulated documents (14 percent).
• Only 5 percent of fraud attempts are linked to failed face biometrics.

The report delves into specific details about cryptocurrency fraud, including when it tends to occur (Tuesdays between 14 and 16 UTC) and the profile of a typical fraudster. According to the report, a typical fraudster is a French man in his late twenties, using a mobile device on a regular Tuesday afternoon in May while attempting to pass off a printed fake passport as real. France is identified as the most common nationality attempting crypto fraud.

The report also underscores the importance of vigilance across the crypto sector, as fraud cases can occur globally. The cryptocurrency system’s emphasis on anonymity can make it vulnerable to fraudulent activities.

Furthermore, the report highlights the challenges of keeping up with compliance in the crypto industry, as AML regulations are continually evolving. For instance, the new EU Markets in Crypto Assets (MiCA) regulatory framework, set to take effect in 2024, aims to regulate the crypto industry, which has been compared to the Wild West by some officials.

Overall, the report underscores the importance of robust identity verification and AML measures in the cryptocurrency sector to mitigate fraud and ensure security.