Criminals are increasingly exploiting artificial intelligence to bypass identity verification systems and commit fraud on a scale not seen before, according to the latest Fraudscape report by Cifas, the UK’s leading fraud prevention service.
The report, covering the first half of 2025, reveals that over 217,000 fraud risk cases were recorded in the National Fraud Database by Cifas members—marking the highest-ever volume of filings for a six-month period. A key driver behind the surge is the use of advanced AI to create fake identities, forge documents and circumvent identity verification processes with alarming precision.
Between January and June 2025, identity fraud alone accounted for more than 118,000 cases, reflecting a troubling trend. Cifas highlights the rise of synthetic identities—digitally crafted profiles that can pass traditional security checks. These sophisticated frauds are no longer limited to high-risk sectors. The report notes sharp increases across industries once deemed lower risk, including gambling and insurance.
Insurance fraud, for example, has jumped 25%, driven primarily by identity theft and false information in motor insurance applications. In the telecommunications sector, facility takeovers—which involve seizing control of accounts—now represent 69% of all such frauds, up from 40% in 2024. Public sector fraud has also surged 88%, particularly in driving licence applications where perpetrators use victims’ past addresses.
A growing concern is the trend of individuals willingly selling their own identities. Often lured by the promise of financial gain, victims unknowingly provide criminals with access to genuine credentials—resulting in potentially devastating consequences, including being held liable for fraudulent loans or credit applications made in their name.
Facility misuse remains a persistent issue, with a 35% rise from last year and over 51,000 incidents logged. Nearly three-quarters (73%) of these involved bank accounts, representing a 20% increase compared to the same period in 2024.
Meanwhile, insider fraud—criminal activity conducted by employees—saw a 32% increase. According to the report, dishonest behaviour includes concealing past employment details, working multiple roles across sectors simultaneously without employer knowledge (known as polygamous working), and colluding with fraudulent reference providers to cover gaps in employment. Some insiders are even being recruited to access sensitive corporate information.
Cifas CEO Mike Haley said, “Fraud is a national emergency – and AI has supercharged the threat, making it more sophisticated and harder to detect. No sector, business, or individual is immune.
“Tackling this fast-changing danger requires urgent, coordinated action through cross-sector collaboration and the sharing of data and intelligence. Only by working together can we stay ahead of the criminals and keep organisations and people safe from harm.”
The report underscores a growing need for businesses and government bodies to invest in stronger identity verification tools, employee screening measures, and fraud detection systems that can adapt to AI-driven threats.
Fraser Mitchell, Chief Product Officer at SmartSearch said: “The UK’s Online Safety Act, mandating robust age verification, is a crucial step for online protection, yet it critically exposes the growing sophistication of fraudulent identities. “As Cifas has highlighted, we’re now seeing legitimate credentials being sold or manipulated by criminals, while AI-enabled synthetic identities and convincing fake documents are bypassing traditional verification methods with alarming accuracy.
“This is no longer just about teenagers accessing restricted sites – it’s about people unknowingly enabling serious financial crime, from identity theft and account takeovers to large-scale fraud, money laundering, and even terrorist financing. “What we constantly observe is a significant appetite for creating and using fake documents to bypass controls. From fake passports to driver’s licences with seemingly accurate details, including coded date of birth data in the Driver Number, these documents often pass visual inspection. But unless you’re using a specialist provider with the technology and expertise to detect these nuances, they’re incredibly difficult to spot.
“Basic checks are no longer enough. In today’s landscape, where criminals are agile and constantly evolving their methods, having such a robust system isn’t just about meeting compliance; it’s fundamental to fighting financial crime, protecting reputations, and building lasting trust with every interaction . “We echo Cifas’ call for collaboration and intelligence sharing but urge that this must be underpinned by technology capable of staying ahead of fraudsters. Without it, the risks to both people and businesses will only continue to escalate.”
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