Handing over a digital copy of your passport or driving licence without questioning who receives it is a surprisingly common mistake – and one that can carry serious consequences.
Research shows that a third of people in the UK have unknowingly exposed their identity in this way. At the same time, almost every adult has encountered suspicious online content, creating an environment where criminals have countless chances to imitate identities, infiltrate accounts and steal savings, claims RelyComply.
With activity surging during holiday periods, the gulf between public awareness and complex anti-money laundering (AML) protocols is widening at a dangerous pace.
Identity theft remains one of the most persistent financial crime risks affecting consumers and institutions alike. The UK alone shoulders nearly £2bn in annual losses from identity fraud, contributing to a global market worth trillions. High-profile breaches have made the situation worse. In 2025, retail giants such as Marks & Spencer and Co-op reported significant system failures and data incidents, pushing cybercrime directly into public view. These attacks drain finances and cause emotional fallout, further intensifying pressure on banks and technology providers to protect the information customers entrust to them. Despite this, phishing remains the most common threat: around 86% of businesses have faced attacks in the past year, with many SMEs still struggling to keep up.
Regulatory work is under way to strengthen national resilience. The 2025 Data (Use and Access) Act aims to modernise digital verification and Smart Data applications across finance, while clarifying rules around data privacy. Ofcom has also stepped in with the Online Safety Bill, which places responsibility on digital platforms to prevent the spread of harmful or fraudulent content. Together, these efforts aim to close compliance gaps and support stronger AML defences.
Yet threats continue to grow in complexity. Public guidance from bodies such as Ofcom, Cifas, Norton and Get Safe Online is vital, but many vulnerabilities sit within the systems meant to protect citizens. Government portals, banks and financial providers often use different identity verification (IDV) methods – from biometrics to multi-factor authentication – but these operate in isolation. Fragmented data and outdated frameworks create opportunities for fraudsters to exploit weaknesses even when individuals act responsibly. Plans for a new Digital ID “Brit Card” underscore the need for stronger, unified IDV, but public concerns around data transparency highlight the importance of building trust.
Trust is also central to how businesses interact with customers. Organisations must meet strict data protection rules set by the Information Commissioner’s Office (ICO), and AML frameworks are a core part of that resilience. Strong fraud prevention demands several foundations: risk-based controls that detect anomalies, continuous verification through AI-driven KYC tools, unified systems to replace scattered datasets, intelligent use of behavioural biometrics and device recognition, and the support of agile RegTech partners. Cross-border collaboration is equally crucial, as identity fraud remains a global challenge.
Consumers themselves also play a vital role. As more people access sensitive services via laptops and smartphones, digital literacy must rise in parallel. Regular training, clear educational content and persistent communication are essential to helping users recognise red flags.
Public resources such as Cyber Aware and the Metropolitan Police provide guidance on device security and safe online behaviour. Reporting suspicious activity to Action Fraud, financial institutions or the National Cyber Security Centre (NCSC) can significantly improve national intelligence. Meanwhile, the ICO empowers individuals to exercise their data rights, submit Subject Access Requests and hold institutions accountable.
Building trust, transparency and strong digital defences requires collaboration across government, regulators, financial institutions and the wider technology ecosystem. With the right combination of AML solutions, education and coordinated protection frameworks, the UK can make meaningful progress in the fight against identity theft.
Copyright © 2025 RegTech Analyst
Copyright © 2018 RegTech Analyst
