Fighting AI-Driven Fraud in 2025: Adapt Now or Fall Behind

The world is witnessing the evolution of AI and, with it, an unprecedented wave of challenges. Generative AI, which debuted in late 2022 with tools like ChatGPT, has shifted the landscape of business and crime. Fraudsters quickly recognized AI’s potential and harnessed its power to escalate their schemes. They use the technology to outpace traditional defenses and introduce fraud on an unprecedented scale. The question is, will we harness AI-powered tools to fight back or let fraudsters decide the future?

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Fraud in the Age of AI

Just a few years ago, fraudsters were limited by their lack of sophistication. A "Nigerian Prince" email scam was relatively easy to identify—full of poor grammar, spelling mistakes, and obvious red flags. But today, scams are nearly indistinguishable from legitimate transactions, as fraudsters bypass security measures and create increasingly believable scenarios. This is a war right now. It's not just a factor. It's a war.

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At Unit21, we’ve already seen data showing that 40% of transactions blocked for scams in 2024 were flagged due to AI-driven fraud tactics. In the same year, the FBI reported a 23% rise in fraud cases. And, one of the most shocking scams we recently observed in Unit21 was an AI-generated voice mimicking a grandchild’s voice to manipulate their grandparent into sending money.  As AI becomes more accessible, these deceptions will only become more prevalent.

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Still, some barriers remain, 44% of our participants in our webinar, “The Good, Bad, and Ugly of GenAI in Fraud & AML,” cite concerns about explainability and regulatory hurdles as primary roadblocks to AI adoption. Accuracy and risks associated with AI "hallucinations" are also top concerns, followed by worries that their current vendors don’t offer AI solutions.

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How Can We Win the War Against Fraud?

Fraudsters exploit two key drivers: need and greed. They manipulate victims by creating a sense of urgency or temptation, pushing them to act on impulse. But when victims are given even a little more time to pause and reflect, they often abandon fraudulent transactions. That’s why education is one of the most powerful tools in the fight against fraud. Raising awareness and slowing down decision-making can prevent fraud before it happens.

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However, education alone isn’t enough. Fraudsters are leveraging AI to enhance their attacks, and we must do the same to fight back. The way businesses use AI will determine whether we win this war. AI has countless applications, from asking ChatGPT about data trends to deploying AI agents for Level 1 fraud reviews or entity research.

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At Unit21, we focused on the risk-reward question: Where are the lowest risk and highest reward? We realized that 80% of the work in a fraud alert is just gathering information, not decision-making. So, we prioritized optimizing that process. It’s explainable, keeps humans in the loop for the final decision, and significantly reduces manual work by 80% with minimal risk. The key is to start with the lowest-risk, highest-reward tasks and scale up over time.

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As an industry, AI adoption must also align with regulatory compliance. The goal isn’t to have AI make the final decision—that’s unacceptable. We have to leverage AI to automate processes with full explainability. If your current technology doesn’t offer AI-driven solutions, it’s time to make an exit plan.

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Beyond KYC: Tracking the Flow of Money with Data Monitoring

At Unit21, we see AI as our ally, not just a tool for criminals. We're already using it to tackle fraud in new ways. Our perspective is that traditional Know Your Customer (KYC) methods are no longer enough. KYC used to be a catch-all, but the reality is that fraud losses happen after an account is created, meaning fraudsters are successfully circumventing KYC checks. 

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We’re shifting the focus from who a person is to where the money is going. We recently launched the Counterparty Risk Consortium, enabling financial institutions to share critical data on high-risk accounts. If others in the network flag a bank account or routing number as a known bad destination, we can take action before fraud occurs.

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We’re also enhancing bank account and routing number verification through a soon-to-be-announced partnership, adding another crucial layer of protection. But fraud isn’t just about the final destination; it’s about what happens in between. Has the user changed their password? Where are they logging in from? Is the transaction originating from a bot network or data center? 

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However, you have to not just do transaction monitoring; you also need to do data monitoring. Relying on static rules and a handful of risk parameters won’t cut it. Fraudsters leave behind traces; AI allows us to follow the trail. If businesses aren’t leveraging all available data to identify patterns, they’re already one step behind.

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Building a Future-Ready Defense Against AI-Driven Fraud

We must stay ahead in technology because fraudsters are already doing so. They are not just bad actors; they are committing serious crimes. Today, we have seen that with the right governance, we can fight back in a clear and explainable way.

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AI automation has immense potential, but its application must be intentional. Evaluate your workflows, leverage existing vendors where possible, and if you don’t have the right tools in place, consider what’s needed to stay ahead. Black-box AI is not acceptable. As you integrate AI, make sure it remains explainable and accountable. 

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At Unit21, we’re actively driving AI innovation to make fraud prevention smarter and more effective. Want to see how it works? Get a demo today and discover how AI-powered fraud detection can help you stay ahead.

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