Financial fraud prompts $14M digital identity intelligence investment, calls for action

Financial institutions and regulators continue to invest in anti-fraud and identity verification.

Barclays has invested in anti-fraud platform Heka as part of a $14 million Series A funding round led by Windare Ventures. The Israeli-American startup works with banks, payment processors and pension funds to target synthetic fraud and identity manipulation.

Co-founded by a senior Israeli intelligence officer, a Merrill Lynch executive and a fintech lawyer, the company says that its products are inspired by “the tradecraft of the intelligence community.”

Unlike tools that rely on static files, scores, or blacklists, Heka processes large volumes of public data to create digital profiles that surface alias use, reputational exposure and behavioral anomalies.

The data allows financial institutions to detect synthetic activity and other signs of fraud: Heka says its engine caught 65 percent of account takeover losses. The company claims to be able to identify synthetic and manipulated digital identities in real time.

“The credit bureaus were built for another era,” says Heka CEO and Co-founder Idan Bar-Dov. “Today, both consumers and risk live online. Heka’s mission is to be the default source of truth for this new digital reality – always-on, accurate and explainable.”

The funding will be used to boost Heka’s U.S. expansion and strengthen its position in the UK and Europe.

ECCB governor calls for digital ID system

Caribbean countries should introduce digital government ID systems that could be automatically verified by banks, similar to models used in India and Estonia, according to the governor of the Eastern Caribbean Central Bank (ECCB).

The digital IDs would not only streamline banking services and reduce barriers across the currency union but also solve issues with financial initiatives such as the recently launched ECCB Credit Bureau and government payment systems, Governor Timothy Antoine said last week.

Introducing digital IDs would be a “medium-term” goal for countries within the currency union, which include members of the Organisation of Eastern Caribbean States (OECS) that use the ECCB-issued Eastern Caribbean Dollar. The digital ID would give citizens a single identifier that could serve as identification, address verification and income proof, according to the Antigua Observer.

The ECCB is currently implementing interim measures, which could include identification issued by the Credit Union in the future.

“The Credit Bureau has the capacity to provide a single-source identification of customers on behalf of banks, where you pretty much go to the Credit Bureau, they access the systems of governments around the region and they provide banks with a source of identification,” says Antoine.

US CBA calls for cross-sector cooperation in fighting fraud

Banks have long shouldered the costs associated with mitigating financial fraud and scams. The rapid increase in such crime, however, is showing that the issue deserves a “coordinated, national response” that would include both the government and other sectors, says Consumer Bankers Association (CBA) Vice President Brian Fritzsche.

The trade association executive highlights that banks have been liable for unauthorized transactions as they are well-positioned to confirm a consumer’s identity. In many frauds, however, the consumer sends money to people they have communicated with through social media, often using channels outside of traditional banking that lack conventional protections, such as Bitcoin ATMs.

“These infrastructures operate with minimal oversight and transparency, providing financial institutions with few, if any, tools to intervene when problems arise,” Fritzsche writes in an op-ed for the Open Banker.

A coordinated response would require involvement of government agencies, law enforcement, telecommunications providers, social media platforms, fintech companies, and others.

“In order to combat these evolving tactics, the government must spearhead a cross-industry public-private national strategy against fraud and scams,” he concludes.

UK regulator removes 1,600 unauthorized financial services

The UK Financial Conduct Authority (FCA) has suspended, removed or blocked more than 1,600 websites focused on financial services. The regulator also removed over 50 apps from Google Play and the App Store to prevent fraud.

The FCA attributes the high figures to improved detection technology. During 2024, the authority cancelled the authorisations of over 1,500 firms, 20 percent more than in the previous year.

It also fined two banks a total of over £45.5 million ($61.1 million) for failing to prevent financial crimes such as sanctions controls and money laundering and interviewed 20 unauthorized influencers for illegally promoting financial products.

Despite these successes, removing websites may not be enough to prevent fraud, according to Jonathan Frost, director of Global Advisory for EMEA at BioCatch.

“Poor practice on the part of registrars allows bad actors to rapidly phoenix their web presence, as is the case with all fraud; there is a need for a whole-of-system approach,” says Frost. “Operators of web domains, such as .dk, have demonstrated that bad actors can be denied access to domains by insisting on robust ID verification.”

Article Topics

Barclay's  |  BioCatch  |  biometrics  |  Caribbean  |  digital identity  |  financial services  |  fraud prevention