Professional fraud rings appear to have shifted their focus from the cryptocurrency sector to digital payments, according to a quarterly analysis by ID verification provider AU10TIX.
The AU10TIX analysis of millions of transactions processed from July to September 2023 reveal that while the digital payments industry saw fraud rise by 56%, reports in the crypto industry, traditionally a leading target for fraudsters, fell by 51%.
AU10TIX analysts attribute the change to the June introduction of an EU regulation targeting cryptocurrency assets, which is aimed at protecting investors and consumers. The regulation does not take effect until 2024, AU10TIX noted, but since many organizations are adopting stricter KYC guidelines that align with the new rules, the criminal organizations that previously targeted crypto appear to have shifted their focus.
Among the sectors scrutinized in Q3, the payments sector was the industry most highly targeted by organized fraud groups, responsible for 51% of all financial fraud attacks, up from 32% in Q2. In contrast, the crypto industry was responsible for only 23% of attacks, down from 47% in Q2. These findings underscore a clear correlation between regulatory frameworks and the prevalence of fraud.
North America saw the highest volume of payment sector attacks of all regions studied. AU10TIX attributes this to fraudsters continuing to capitalize on the economic recovery and increased spending. APAC was the second most targeted region, which AU10TIX ascribes to rising digital transaction complexity (involving diverse economies and cross-border payments) presenting challenges for identity verification and creating loopholes for fraudsters.