Financial crime continues to evolve at speed, and one of the most troubling trends is the rise of SIM swapping. The tactic, which allows criminals to hijack phone numbers and impersonate victims, has transformed what used to be a straightforward identity check into a high-risk vulnerability for financial institutions.
Although suspicious transactions can indicate potential laundering, the real battleground sits at the start of every interaction: confirming an individual’s identity, said RelyComply.
With powerful impersonation tools becoming more accessible, the need for robust verification methods has never been more pressing.
The problem extends far beyond spoofed faces or doctored documents. Everyday devices are now being exploited in ways few anticipated, and SIM cards have become an unlikely but dangerous weak point. These small chips are essential for accessing mobile networks, yet the lack of consistent identity checks during registration is enabling widespread abuse. The fallout is significant, with telcos, banks and FinTech firms increasingly exposed to risk when compromised SIMs are used to infiltrate accounts or bypass security controls.
SIM swapping has escalated sharply, particularly in the UK where fraud prevention organisation Cifas recorded nearly 3,000 cases last year – a 1,055% rise. Criminals often gather personal details first and then convince a mobile provider to port the number onto a SIM card they control. Once they gain access, they can intercept calls, texts and authentication messages, effectively taking ownership of a victim’s digital life.
South Africa, where SIMs must be registered under the RICA Act, offers another example of the complexity. Despite mandatory ID checks, the system has not stemmed the tide of illegal SIM use. With discarded or pre-registered cards freely circulating, criminals find it easy to operate undetected and bypass investigations.
The problem escalates further with SIM farms, which enable attacks on an industrial scale. These setups, often hidden in data centres, connect thousands of cards to automated systems capable of launching high-volume impersonation or fraud campaigns. In New York, one such operation generated traffic so overwhelming that emergency services struggled to coordinate. The UK is now preparing to ban SIM farm devices, becoming the first European country to take this step. Investigations by WIRED, however, show how these tools can circumvent even advanced detection systems, masking criminal activity by mimicking legitimate user behaviour.
The financial impact is immense. Cybercrime groups are increasingly coordinated, operating across borders and targeting mobile banking and investment apps. Operation Red Card, led by Interpol in seven African countries, uncovered networks using fraudulent SIMs to breach accounts, while Europol dismantled another cell responsible for €6m in losses across Austria and Latvia. These groups operate like full-scale businesses, offering cybercrime-as-a-service and exploiting verification systems that many institutions still treat as a routine formality.
The consequences of weak ID verification are clear. Each illegal SIM effectively represents a counterfeit identity, making onboarding and authentication highly vulnerable. Businesses relying on one-time passwords remain particularly exposed, as SMS-based two-factor authentication can be intercepted once a number is hijacked. The cost is steep too, with banks spending tens of millions annually on SMS OTPs, re-verification checks and fraud-related remediation. This method alone cannot outpace the increasingly sophisticated tactics used by identity thieves.
More secure identity checks do exist, but they require layered defences rather than outdated single-point controls. Risk-based verification tools, biometrics, AI-driven fraud detection, and behavioural intelligence are all helping institutions build more accurate identity profiles. While deepfakes and injection attacks continue to challenge biometric systems, modern KYC technology can spot minute inconsistencies in lighting, movement or texture. Meanwhile, behavioural data—captured through digital interactions—offers banks a unique pattern of individual user behaviour that is harder for criminals to imitate.
Moving beyond SMS is another essential step. Push-notification MFA is considered significantly safer because it links directly to a registered device. Similarly, hardware keys and authenticator apps remove reliance on vulnerable mobile networks and make SIM-based attacks far more difficult.
Ultimately, tackling SIM-enabled identity crime demands collaboration. Telcos, financial institutions, insurers and governments operate within shared compliance ecosystems, yet their siloed approaches are what often create the gaps exploited by fraudsters. Stronger cooperation across sectors, supported by RegTech tools that streamline IDV and AML processes, is essential. Technology can enable instant verification, seamless onboarding and real-time alerts that feed into investigations involving law enforcement and regulators.
Public awareness also plays a role. Users must understand how SIM fraud works and how to protect themselves, but guidance must originate from businesses with strong compliance foundations. As SIM fraud operations grow more sophisticated and widely distributed, breaking these networks requires collective intelligence and firm regulatory leadership.
The message is clear: identity protection hinges on unified action. Criminals have already harnessed data and automation to exploit weaknesses at scale. For the “good side” to regain control, organisations must band together through shared knowledge, modern RegTech capability and strengthened ID verification strategies—before the threat accelerates further.
Copyright © 2025 RegTech Analyst
Copyright © 2018 RegTech Analyst
