Definition
Synthetic Identity Fraud refers to a form of identity fraud in which a fictitious identity is created by combining real and fabricated information. Typically, genuine personal data—such as social security numbers or dates of birth—is merged with invented names, addresses, or other identity attributes.
The objective is to establish a seemingly legitimate identity that does not correspond to a real individual and can be used for financial or fraudulent activities.
Context
Synthetic Identity Fraud is particularly relevant in environments involving:
• financial services and lending
• Know Your Customer (KYC) and Customer Due Diligence (CDD)
• digital onboarding and identity verification
• online banking and fintech platforms
Unlike traditional identity theft, this method does not involve taking over an existing identity. Instead, a new identity is gradually constructed and strengthened over time through legitimate-looking activity.
The increasing digitisation of onboarding processes and the availability of large datasets have significantly increased exposure to this type of fraud.
Meaning
Synthetic Identity Fraud is considered one of the most difficult fraud types to detect, as there is no clear victim who can report misuse.
Key challenges include:
• Detection complexity: no direct link to a real individual
• Long-term development: identities are built over time
• High financial impact: especially in credit and lending environments
• Circumvention of controls: traditional KYC measures are insufficient
Organisations must therefore complement identity verification with behavioural analytics and cross-data validation.
Example
A synthetic identity is created by combining a real but inactive social security number with a fictitious name. Over time, small financial activities are conducted to establish a credit profile.
Once the identity is considered credible, larger credit lines are obtained and subsequently defaulted.
Sources
Suggested citation
wirtschaftsforensik.ch Editorial Team: "Synthetic Identity Fraud", in: Glossary, wirtschaftsforensik.ch, https://wirtschaftsforensik.ch/glossar/synthetic-identity-fraud/, accessed April 18, 2026.