Jack J. Bensimon Countering Identity Theft and Synthetic Identities: Measures to Mitigate Losses Jack J. Bensimon Financial Crime Risk Management Advisor Securefact September 22nd, 2016

What is synthetic identity theft? Involves the use of a fictitious identity in perpetrating fraud Allows thieves to create identities based on new and fictitious ID Securefact

How is synthetic ID theft executed? Credit file is created through a synthetic identity Fraudsters use fictitious identity to obtain credit Makes payments to establish credit and make purchases Securefact Jack J. Bensimon September 22, 2016

New threats: Ransomware and Social Engineering Email received by fraudster that locks you out of key data – denial of data Social engineering – compromise PC, obtaining SIN Comes from trusted sources/friends Securefact

How does this risk affect my business? Growing pervasiveness Escalating financial risk Reputational risks from breaches Regulatory risk #1 Risk issue for banks in 2016* Securefact *Source: Wall Street Journal, 2016

Fake Accounts, Real Losses *Source: Javelin Strategy and Research *Source: ID Analytics Securefact

Case Study Two cement trucks bought in Canada for $1M via bank loan Trucks are purchased through both synthetic ID and synthetic company Trucks shipped to Dubai via railcar and sold on black market Synthetic identity reported trucks stolen and collected insurance proceeds Achieved by legitimate documents via fictitious names Securefact

How to prevent doing business with fraudsters Implement effective tools to manage KYC data Effective Policies & Procedures – prevent, detect, monitor Satisfy current and future regulatory requirements Securefact

New technology to manage the process Ability to automate and standardize Prevent fraud and reduce losses Satisfy current and future regulatory needs Securefact

Securefact SIDni™ Launching Fall 2016 ID Verification Engine & Fraud Detection Tool Credit Bureau Data Utility (Telecom) Data Government Sources (Phase II) Aggregate Social Biometrics Address Validation Secure IDentity Network for Individuals FINTRAC compliant CNP* identity management tool with enhanced fraud metrics Multiple Authoritative data Verified within seconds Built to support Digital Onboarding Reduce exposure to fraud losses Simple integration Web Service via API API Delivery for Simple Integration Your Existing Processes Securefact *CNP = Customer Not Present

Summary Synthetic Identity and Identity Theft are pervasive Reputational risk linked to branding New technologies are mitigating fraud and losses Lenders not immune to regulation – KYC paramount Jack J. Bensimon Securefact