The report lists 2 reasons why fintech and crypto firms conduct KYC checks:
As for the sectors experiencing fraud, Buy Now Pay Later (BNPL) has become the leading target, while crypto was the least affected despite the attention the sector gets.
Here are the stats according to the report:
BNPL – 39%
Investments and Saving – 31%
Banking and Lending – 14%
Professional Services – 14%
Remittances – 12%
Crypto – 12%
According to the report:
“Large, difficult to trace, high-profile scams have plagued the crypto market often giving them a notoriously bad reputation and intense scrutiny from regulators.
Yet, Smile Identity’s data shows that the crypto platforms conducting KYC on with our system are actually reporting a lower rate of attempted fraud than other industries.”
– Smile Identity
Smile Identity plugs its software to Identification (ID) databases across several jurisdictions including:
According to their data, Kenya has seen an increase in biometric fraud while the same has declined in the other two countries in H1 2022.
The main types of fraud that have been registered in Kenya include:
Stolen ID Information
Synthetic Identity Fraud
Stolen ID Information occurs when a user tries to sign up to a service using an ID number or document that is not their own.
A selfie spoof is when someone tries to forge the presence of an authentic user with a photo. Some examples of this includes photos of prints, photo from a device, and printed face masks. These are sometimes referred to as ‘cheapfakes.’
Duplication fraud occurs when users create multiple accounts in order to gain some reward being offered by a service such during promotional activities.
The last form of fraud they have found is Synthetic Fraud and Deep-fakes. Synthetic identity fraud combines legitimate and fake information to create a new fake persona.