05 Averting Fraud & Scams

“The speed and sophistication with which fraudsters are now able to exploit AI and emerging technologies is outpacing traditional defenses. To effectively mitigate these threats, regulators, companies, governments, and law enforcement must break down silos and collaborate more openly—sharing the data they sit on and coordinating responses in real time. Fragmented efforts are no longer sufficient in a world where fraud evolves faster than policy.”

Steve D'Antuono
Partner
Advisory

“Emerging market dynamics, including open banking, digital assets, and M&A activity, are reshaping financial services and creating novel fraud risks. Financial institutions must guard against fragmentation and ensure cross-functional coordination to stay ahead of fraudsters and protect consumers.”

Chad Polen
Principal
Advisory

Attributable largely to technology innovation (and primarily AI and GenAI), the speed, scale, and complexity of frauds and scams have significantly increased, rising to historic levels of volume and cost. These tools “turbocharge” sophisticated frauds and scams (e.g., impersonation, instant payment, deepfakes and social engineering), driving the need for a cohesive regulatory approach across functions within the organizations to detect, prevent, and mitigate these crimes.

Examples	What to Watch
$12.5B in reported losses, a 25% year-over-year increase; 800M+ imposter scams reported¹ “Cyber-enabled fraud” (using internet or other technology) accounted for more than 80% of all reported losses² Recommendation for a “government-wide” strategy to counter scams and improve complaints reporting, consumer education, and federal coordination (e.g., GAO Report)	Heightened regulatory attention to the effectiveness of fraud risk management programs, including TPRM, data sharing, and complaints analysis, to monitor, detect, and mitigate threat actors as well as keep pace with evolving threats Potential for more categories of fraud and scams to be reported Potential for escalation in the scale and sophistication of frauds and scams to be elevated to a national security issue leading to executive, legislative, and/or regulatory action Forthcoming NACHA fraud monitoring rules for ACH payments

Examples

What to Watch

$12.5B in reported losses, a 25% year-over-year increase; 800M+ imposter scams reported¹
“Cyber-enabled fraud” (using internet or other technology) accounted for more than 80% of all reported losses²
Recommendation for a “government-wide” strategy to counter scams and improve complaints reporting, consumer education, and federal coordination (e.g., GAO Report)

Heightened regulatory attention to the effectiveness of fraud risk management programs, including TPRM, data sharing, and complaints analysis, to monitor, detect, and mitigate threat actors as well as keep pace with evolving threats
Potential for more categories of fraud and scams to be reported
Potential for escalation in the scale and sophistication of frauds and scams to be elevated to a national security issue leading to executive, legislative, and/or regulatory action
Forthcoming NACHA fraud monitoring rules for ACH payments

¹2024 FTC Data Book (most recently available information as of 11/2025)
²FBI 2024 IC3 (most recently available information as of 11/2025)

To carry out executive directives, federal agencies are prioritizing fraud investigation and enforcement related to healthcare; procurement; trade, tariffs, and customs evasion; sanctions evasion and support for cartels and TCOs; securities and other market manipulations; and vulnerable persons (e.g., elders, servicemembers).

Examples

What to Watch

Enforcement policy changes addressing “unchecked fraud in U.S markets and government programs” (e.g., DOJ Memo on White Collar Crime)
Redirected supervision to actual fraud against identifiable victims with material and measurable damage (e.g., CFPB Staff Memo)
Facilitating the ability to identify overpayments and fraud in government activities (EO 14243) along with FCA enforcement
Interagency collaboration (e.g., DOJ/DHS Trade Fraud Task Force)
Heightened enforcement (e.g., DOJ actions under FCA, SEC Cyber and Emerging Technologies Unit)

Broad application of the FCA to include new (nontraditional) areas, such as trade, employment verification, and civil rights
Continued FCA enforcement in priority areas (e.g., healthcare; government contracts; trade, tariff, and customs)
Focus on retail investor protections, including misuse of technology to commit fraud and false or misleading statements about the use of technology (e.g., SEC)

Financial institutions, organizations, and consumers are facing a myriad of frauds and scams, exacerbated by digital assets, open banking and M&A activities. Key among them are:

Impersonation scams, including business email compromise scams
Deepfake/AI enabled scams
“Faster” payments and “instant” payments scams (and relatedly increased attention to liability/consumer reimbursement)
Synthetic identity fraud, identity theft and account takeovers
Check fraud
Elder abuse/vulnerability exploitation

Examples	What to Watch
Data aggregation/reporting of fraud- and scam-related complaints (e.g., Annual FTC Data Book; Annual FBI IC3) Regulatory alerts highlighting areas of rising risk (e.g., FinCEN Alerts re: virtual currency kiosks) Public service campaigns and consumer-oriented materials on detecting and mitigating frauds and scams (e.g., multiple posts by FBI, FRB, FTC) Solicitation for public comments on ways to mitigate fraud (e.g., interagency RFI on payments fraud) Introduction of laws and regulations to enhance consumer protections (e.g., 1000+ state bills in 2025 related to AI³, privacy, or cybersecurity)	The sophistication and variety of frauds and scams will evolve more quickly than regulatory frameworks - bad actors are more flexible than regulators Potential for new frauds and scams to be developed around digital assets (e.g., false products, exchanges, websites, apps) as they gain broader market presence

Examples

What to Watch

Data aggregation/reporting of fraud- and scam-related complaints (e.g., Annual FTC Data Book; Annual FBI IC3)
Regulatory alerts highlighting areas of rising risk (e.g., FinCEN Alerts re: virtual currency kiosks)
Public service campaigns and consumer-oriented materials on detecting and mitigating frauds and scams (e.g., multiple posts by FBI, FRB, FTC)
Solicitation for public comments on ways to mitigate fraud (e.g., interagency RFI on payments fraud)
Introduction of laws and regulations to enhance consumer protections (e.g., 1000+ state bills in 2025 related to AI³, privacy, or cybersecurity)

The sophistication and variety of frauds and scams will evolve more quickly than regulatory frameworks - bad actors are more flexible than regulators
Potential for new frauds and scams to be developed around digital assets (e.g., false products, exchanges, websites, apps) as they gain broader market presence

³Derived from Multistate.ai

05 Averting Fraud and Scams

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Laura Byerly

Managing Director, Clients & Markets, Regulatory Insights, KPMG LLP

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Steven D'Antuono

Partner, Advisory, Forensic, KPMG LLP

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Chad M Polen

Partner, Advisory, Financial Services, KPMG US

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Laura Byerly

Managing Director, Clients & Markets, Regulatory Insights, KPMG LLP

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Steven D'Antuono

Partner, Advisory, Forensic, KPMG LLP

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Chad M Polen

Partner, Advisory, Financial Services, KPMG US

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Traditional frauds and scams are giving way to a new generation of rapidly evolving AI-enhanced activities carried out at scale, significantly raising the importance of effective risk management and reporting.

“Fast & Furious”

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05 Averting Fraud and Scams

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