Financial institutions are facing a significant surge (Off-site) in synthetic identity fraud as criminals increasingly leverage artificial intelligence (AI) to scale and streamline their operations.

Furthermore, generative AI can create realistic text, images, video and audio — and when combined with malicious code, allows criminals to automate key steps in synthetic identity schemes, including:

• Creating synthetic identities and producing convincing identification and supporting documents (such as utility or mobile phone bills)
• Submitting applications for new bank accounts and credit cards
• Satisfying security measures, including facial recognition and liveness detection, during account opening
• Conducting transactions at scale across multiple institutions to mature accounts, strengthen profiles and increase available credit

These generative AI tools are readily accessible and often free or low-cost, giving bad actors the ability to rapidly expand their operations. This is not a distant or hypothetical threat, as it is already reshaping the fraud landscape. According to a recent report (Off-site), synthetic identity fraud continues to increase year over year and was the fastest-growing type of fraud globally in 2025, with an eight-fold increase from 2024. This level of automation enables criminals to conduct end-to-end customer interactions on a large scale, significantly increasing both the volume and sophistication of synthetic identity attacks. To help mitigate potential losses, financial institutions must understand how emerging AI tools enable synthetic identity fraud and assess the effectiveness of their fraud prevention controls for new accounts and credit products.