Middle East banks brace for deepfake-driven identity fraud

Rob Woods, director, fraud and identity, LexisNexis Risk Solutions/Image: Supplied

Financial institutions across the Middle East are facing a new wave of digital fraud, with synthetic identities and AI-powered deepfakes testing the resilience of traditional verification processes. According to Rob Woods, director, fraud and identity, LexisNexis Risk Solutions, the region’s unique demographic and regulatory environment creates both opportunity and vulnerability.

Why the Middle East is a prime target

“The region’s broad diversity of international expatriates living, working and traveling creates a range of identity verification requirements. This complexity allows fraudsters to exploit uncommon identity types to bypass verification processes,” Woods explains. With millions of people moving through the region every year, verification systems can become fragmented, leaving space for fraudsters to innovate.

Advances in generative AI have only sharpened the threat. “Deepfake technology has advanced significantly in the past two to three years thanks in large part to AI. Fraudsters now use these widely accessible consumer tools to create real-time overlaying deepfakes in minutes,” says Woods. The sophistication of these fakes means “humans increasingly struggle to differentiate between authentic and fake videos or images.”

Traditional security controls such as manual reviews or static document checks are no longer sufficient. “AI-powered technology designed to detect deepfakes provides the most effective solution against AI-generated fraud,” Woods stresses.

For banks, the shift to digital-first customer onboarding is a double-edged sword: it enables scale and convenience but also opens the door to AI-enabled synthetic identities. “Detecting legitimate customers in digital onboarding has become progressively more challenging due to high-quality AI-generated deepfakes and the prolific use of synthetic identities,” Woods notes.

He adds that relying heavily on manual processes creates bottlenecks and worsens customer experience. Instead, “banks can use machine learning and deep neural networks to quickly adapt to new fraud tactics. Advanced technological solutions provide the most reliable detection against these attacks.”

Behavioural biometrics as a differentiator

Among the emerging solutions, behavioural intelligence is proving particularly effective. “To detect fraud, behavioural intelligence analyses device signals, such as how a person has historically typed or swiped on a device versus how they are attempting to interact today,” Woods explains.

By identifying subtle differences in how a genuine user engages with their device, banks can spot red flags early. “When combined with deepfake detection, layers of intelligence help differentiate genuine users from synthetic ones,” he adds.

Despite these technological advances, a lack of systemic collaboration remains a weakness in the region. “Fraud prevention is hampered by the lack of a unified online identity system and inconsistent privacy regulations across countries. Companies often hesitate to share information, citing competitive concerns,” says Woods.

He highlights positive momentum in the UAE, where banks are already collaborating within a digital community to exchange fraud intelligence. “Adopting privacy-by-design principles enables fraud intelligence sharing through unique digital identities,” he explains. “Risk insights from data consortiums also play a key role.”

Not all institutions can deploy large-scale, custom fraud detection systems. Smaller banks and fintechs often struggle with budget and resource constraints. But Woods believes scalability is possible through collaboration. “Organisations of any size can join a global community of like-minded entities to share knowledge and combat fraud as a network,” he says.

Through platforms such as LexisNexis Risk Solutions, “tier-one banks, small lenders and fintechs” can tap into shared fraud intelligence and continuous machine learning updates. “An AI-powered solution that enables document authentication and biometric verification helps organisations confidently approve trusted transactions while detecting deepfakes and forged documents,” Woods explains.

The case for regional cooperation

With fraud rings now operating like professional networks, the region needs an equally networked response. “Fraud rings today operate like corporations. They are highly matrixed and networked with one another. What’s the best way to fight a network? The answer is a network that shares risk insights,” Woods argues.

Here, regulators and law enforcement play a pivotal role. “Fraud risk insights become more effective when regulators and law enforcement actively engage by sharing intelligence that leads to arrests and convictions,” he says. Ensuring compliance with privacy laws while enabling secure intelligence exchange will be crucial for long-term resilience.

Woods emphasises that effective fraud prevention cannot come at the cost of user experience. “Fraud prevention and a great customer experience are both business-critical. Both can be achieved at the same time,” he notes.

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The solution lies in a risk-based, intelligence-driven approach. “Adding too many layers of authentication or low-tolerance fraud interventions may reduce fraud but risks alienating genuine users. By leveraging frictionless intelligence and network-based decisioning behind the user journey, banks can improve the experience for legitimate customers while applying risk-based authentication to higher-risk transactions.”

The road ahead: new fraud typologies

Looking ahead, Woods expects the fraud landscape in the Middle East to evolve further. “Middle East banks will see a continued rise in authorised push payment fraud and scams, including impersonation and purchase scams,” he says.

“As banks in the GCC improve fraud and authentication controls, fraudsters may involve customers in fraudulent activities to disguise their operations,” Woods warns. To stay ahead, institutions must adopt adaptive, AI-driven tools capable of detecting emerging fraud tactics in real time.

Middle East banks must shift from reactive to proactive defence strategies. Technology, intelligence-sharing, and regulatory alignment will be key to building resilience.