New Middle East Fraud Trends

Cryptocurrency and Fintech Frauds Surge, Deepfake Fraud Emerges, and Forced Verification Raises Concerns in H1 2023

Today Sumsub shares alarming fraud trends that have emerged during the first half of 2023, based on a comprehensive internal analysis across United Arab Emirates, Israel, Qatar and Saudi Arabia.

The Middle East’s rapidly evolving digital landscape has opened new doors for innovation, but it has also become a hotbed for evolving fraud tactics. The data presented below underscores the importance of robust fraud protection measures for businesses operating in the region:

Cryptocurrency and Fintech Fraud Surges:

Fraud cases within UAE’s cryptocurrency sector surged by 150% during the last quarter, demonstrating the growing sophistication of fraudsters in exploiting the booming crypto market. At the same time Israel witnesses a spike in fintech fraud, going up by 270% QoQ in Q2 2023.

Rise of Deepfake Fraud:

A novel threat emerged in 2023 as deepfake fraud surfaced, representing 0.8% of all fraud in Israel and 1.4% in Qatar. This technique involves the creation of lifelike personas using authentic individuals’ documents, posing a unique challenge for verification providers.

Forced Verification Raises Concerns:

Saudi Arabia, Israel and Qatar experienced an alarming surge in forced verification cases, constituting 2.5%, 5% and 11% of all fraud instances in 2023, respectively. Forced verification occurs when individuals are subjected to verification procedures against their will, potentially indicating illicit activities. 

Andrew Sever, Co-founder and CEO of Sumsub, reaffirms the company’s commitment to addressing these evolving challenges: “Middle Eastern markets are among our top priorities for global expansion. With the thriving digital startup ecosystem, there are substantial business prospects due to the high demand for instant user onboarding and robust fraud protection. Sumsub has already assisted numerous global companies in developing efficient verification processes while ensuring compliance and thwarting fraud. It is our company’s mission to bring our services to a broader customer and partner base in the Middle East.

The internal report also unveils specific regional insights:

Country-Specific Trends:

– UAE: The mobility sector almost doubled its fraud cases, experiencing a 97% increase.
– Qatar: During the shift from Q1’23 to Q2’23, the fintech fraud rate in Qatar saw a significant rise of 41%.
– Saudi Arabia: Over the course of a year, from Q2’22 to Q2’23, the number of cryptocurrency fraud cases in Saudi Arabia grew by 27%.

Document Fraud in Focus:

– UAE: In Q2’23, a surprising 3.2% of ID cards were found to be counterfeit, while a staggering 21.9% of passports turned out to be fraudulent.
– Qatar: From Q1’23 to Q2’23, the number of fraudulent residence permits in Qatar increased by 24%.
– Israel: From Q1’23 to Q2’23, instances of ID card fraud in Israel surged by 55%.
– Saudi Arabia: In the span from Q1’23 to Q2’23, the fraud rate related to driver’s licenses more than doubled in Saudi Arabia. Additionally, the number of fraudulent ID cards and passports also more than doubled during this period.

Sumsub’s analysis also reveals that the most widely used documents for verification purposes were ID cards (62% of checks), driver’s licenses (22%), passports (10%), and residence permits (5%).

As Middle Eastern markets continue to evolve, Sumsub stands ready to empower businesses with the tools they need to combat digital fraud and ensure robust protection throughout the customer journey. The internal statistics underscore the imperative for businesses to integrate advanced fraud prevention mechanisms to safeguard both their operations and their clients.

  • September 5, 2023
  • Corporate

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