AI-Generated Fraud Forces Banks to Rethink Identity Verification

Financial institutions are reporting a surge in faked documents that are nearly impossible to detect, forcing a shift in how they verify consumer identities.

Financial institutions are locked in an arms race against generative AI that creates highly convincing fake documents, according to a recent American Banker report.

Sepideh Rowland, a partner at Klaros Group, told the publication that AI-generated financial and identity records are now “nearly impossible to spot,” undermining the standard anti-money-laundering and “know your customer” controls that banks have relied on for years.

The Scope of the Threat

Scammers are using AI to fabricate everything from utility bills used for address verification to complex corporate financial records for shell companies. Rowland even demonstrated how easy this is by generating a fake restaurant receipt using Microsoft Copilot.

Voice cloning poses an additional challenge. A Queen Mary University of London study found that AI-generated voices fooled listeners 58% of the time for cloned voices and 41% for generic AI voices. Participants even rated some AI voices as more trustworthy than real human voices.

Researchers concluded that “under certain conditions, it is not possible for human listeners to accurately discriminate between AI-generated voices and genuine recordings.”

The scale of the issue is reflected in broader industry data. Cybersecurity firm DeepStrike estimated online deepfakes grew from roughly 500,000 in 2023 to about 8 million in 2025.

Rowland noted in The Financial Brand that “AI can quickly digest compliance and security obligations posted on bank websites, assess regulatory filings, and analyze enforcement actions to identify vulnerabilities.”

Implications for the ARM Industry

For the accounts receivable management (ARM) industry, these developments introduce significant operational risks during the collection and validation processes.

“There’s no information sharing database that says the account number that’s presented on the utility bill is a real account number at the utility,” Rowland told American Banker.

This lack of a centralized verification system for non-government documents leaves firms vulnerable to synthetic identities — profiles that blend real and fake data to create a persona that is “virtually indistinguishable from real people.”

Community banks and smaller agencies may be at a particular disadvantage. Rowland noted that criminal organizations often target institutions with limited personnel, where frontline staff may not be trained to recognize the subtle markers of AI fabrication.

Fighting Back

To counter these threats, some institutions are fighting AI with AI. Amanda Swoverland, CEO of Hatch Bank, told American Banker that her institution views the challenge as an “ongoing investment, not a solved problem.” This includes the use of specialized vendors like LexisNexis ThreatMetrix and Docuverus, which offer tools to verify identity data against existing databases.

However, Rowland emphasized that human judgment remains critical. She recommended ongoing staff training to help recognize new fraud forms, including understanding how AI-generated documents and synthetic identities differ from genuine ones.

How ACA Can Help

To help members navigate these risks, ACA is hosting a virtual Cybersecurity & Risk Forum on March 3-5, 2026. Register today to learn about AI-driven fraud, social engineering, and emerging threats. You can also learn how AI tools can be used defensively for fraud detection.

Additionally, ACA’s subsidiary, Collectors Insurance Agency Inc. (CIA), has partnered with Coalition to provide members with a comprehensive cyber risk management platform that has historically reduced claims frequency by 73% compared to the industry average.

ACA members interested in learning more about Coalition’s cyber insurance offerings through CIA can contact the team at collectorsinsurance@acainternational.org or (952) 928-8000, ext. 4.

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