Identity theft and fraud are on the rise as fraudsters are devising new means to open bank accounts with fake names despite bank security. To protect yourself, it is important to understand the various methods fraudsters use to open bank accounts, so you can better protect yourself and your finances. 

Here, we explored some of the common strategies used by fraudsters to open a fake account and share advice on how to identify suspicious activity and protect your identity.

We will look at the various methods used by fraudsters such as using stolen IDs, creating fake IDs, and taking advantage of weak security measures. 

We will also discuss how banks can help prevent identity theft by implementing stronger safeguards such as two-factor authentication and more strictly verifying new account openings. Finally, we will cover some tips on what you can do if your identity has been stolen or a bank account has been opened in your name.

How Do Fraudsters Open Bank Accounts? 


Here are some of the common techniques which fraudsters apply to open bank accounts: 

1. Using Fake IDs to Open Accounts


Opening a bank account using false or counterfeit identification is one of the most common methods used by fraudsters to access your funds. The process is simple: First, the fraudster uses fake or stolen identification - such as a driver’s license or passport - to open a bank account in your name. 

They will then use the new bank account to deposit their own funds, which can be easily withdrawn without any suspicion. To make matters worse, some fraudsters will also open multiple accounts under different names and use them to transfer money between each other. This allows them to quickly move large amounts of money from one account to another without raising any red flags. 


In addition, they can also use these multiple accounts to launder money and hide their transactions from law enforcement. By understanding how fraudsters open bank accounts, you can better protect yourself and your finances. 


Be sure to always stay vigilant and monitor your accounts regularly for suspicious activity.

2. Impersonating Account Holders


Fraudsters can also perpetrate identity theft, creating fake accounts in their own names using stolen information from other consumers. In this process, they might use your personal identification and open an account in your name. 


This type of fraud is often done by opening accounts without the account holder's knowledge or permission, or forging signatures to authorize a transaction. Sometimes the fraudster will even deposit a stolen check into the new account, withdraw funds quickly and then close the account after only months of activity.

This kind of financial crime is difficult to detect since banks receive basic information they need to open an account and they often have no way of knowing it is fraudulent until after the fact. 

That is why it is important to monitor your accounts regularly so that any suspicious activity gets nipped in the bud before it becomes an issue.


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3. Exploiting Online Application Vulnerabilities


Fraudsters are savvy when it comes to exploiting online vulnerabilities that allow them to open bank accounts. By taking advantage of identity theft and synthetic identity fraud, they can make use of stolen personal information to create new accounts.

They also leverage tactics such as automated account creation, fake customer profiles, and bots to quickly generate numerous accounts in a short period. These types of attacks can bypass traditional security measures, exposing financial institutions to significant losses.

Companies can protect themselves from this type of fraud by implementing stronger identity verification methods. Solutions such as biometrics, two-factor authentication, and identity document validation can help secure the customer onboarding process and mitigate the risk of fraudulent accounts. 

Additionally, every financial institution should have systems in place for monitoring and detecting suspicious activity that could indicate a potential scam or fraudulent behaviour.

4. Compromising Insider Access


Fraudsters may also be able to gain access to account information or bypass security protocols by compromising an employee or other insider with access to customer data or systems.

This process, known as social engineering, can take many forms - from bribery or coercion to impersonating a legitimate customer and having them perform a sensitive transaction. 

Additionally, fraudsters may target employees who are not adequately trained on security protocols or those whose credentials may have been obtained through phishing attacks. Whatever the tactic, these schemes can be very successful in gaining access to confidential data.

In order to detect and prevent such compromised access attempts, financial institutions should have rigorous monitoring and internal controls in place. This includes employee background checks, ongoing training on security protocols, and implementing technologies such as multi-factor authentication and biometrics for customer identification. 

By investing in these measures, financial institutions can protect themselves against fraudsters who seek to compromise insider access points.

5. Targeting Weak Verification Procedures


Fraudsters often target banks with weak verification procedures when opening accounts. By only requiring minimal identification and no additional documents, these banks are often more attractive to fraudsters.

Here are some of the ways that fraudsters take advantage of weak verification procedures:

  • Using stolen or fake identification documents
  • Opening multiple accounts with different names and addresses
  • Abusing the account opening process by bypassing the required steps such as providing income proof and bank references
  • Manipulating customer data to get around the anti-fraud checks
  • Disguising their identity by using prepaid cards and paper trails to hide their trail of transactions

These tactics can be very successful in fooling banks into opening accounts without proper verification. As a result, banks with weak verification procedures put their customers at risk of identity theft and financial losses due to fraudulent transactions in their accounts.

6. Opening a Bank Account Through Shell Companies


When a fraudster sets out to launder money through a bank account, they will often use a shell company as the money-laundering vehicle. 

Shell companies are legitimate business entities with no substantial assets or operations and are usually formed to obtain financing before beginning business.

The advantage of shell companies is that they provide a layer of anonymity so that fraudsters can move and store large sums of money without being traced. 

Fraudsters will also use shell companies to open multiple accounts at various banks, allowing them to spread their laundered funds across many institutions and countries quickly and easily.

To open bank accounts with shell companies, fraudsters must first provide false identities and documents to the financial institution, proving the legitimacy of the company. Then, they must pay the necessary fees associated with the account opening process. Finally, they can deposit or transfer funds into the account from other sources and begin laundering money through it.

In order to protect yourself from becoming a victim of fraudsters laundering money through shell companies, it is important to ensure that any financial institutions you work with do their due diligence when it comes to verifying customers' identities and documents before opening accounts for them.



To combat fraud and protect customers, banks must use and continually update their fraud prevention measures, including advanced identity verification, two-factor authentication, and anti-fraud technology such as artificial intelligence and machine learning. Banks can also implement more rigorous customer onboarding protocols to prevent fraudsters from creating accounts in the first place.

Additionally, banks should take proactive measures to stay informed of the latest fraud schemes, as fraudsters are continually adapting their methods. Banks must know the typical fraud indicators, including high-value transactions and suspicious new accounts. By implementing these measures, banks can protect their customers and ensure that their financial services remain secure.

See how 100+ leading companies use Youverify for KYC and AML screening of customers for compliance and real-time risk detection to spot fraudsters on the go. Request a demo today.