(Ecofin Agency) - Generative artificial intelligence (AI) is reshaping industries across the globe, but in Africa, it is also being used for increasingly sophisticated fraud. Criminals are harnessing AI tools to create fake documents, synthetic voices, and hyper-realistic images, driving a new wave of scams and financial crimes. This rise in AI-powered fraud is creating major security and identity verification challenges, according to a report by Smile ID titled 2025 Digital Identity: Fraud in Africa Report Trends, Tactics, and Key Solutions to Tackle Fraud Effectively.

One of the most troubling developments is the surge in biometric fraud. With access to affordable or even free AI tools, fraudsters can now produce high-quality deepfakes fake videos or audio recordings and fake selfies. Data shows that deepfake incidents increased sevenfold between the second and fourth quarters of last year. Selfie anomalies, used to bypass verification systems, now account for 34% of all emerging biometric fraud cases.

These methods allow criminals to fabricate false identities or manipulate existing biometric data, leaving traditional security systems vulnerable. West Africa saw the largest spike in biometric fraud cases in 2024, with identity theft now accounting for 15% of all biometric fraud, up from less than 5% in 2023.

Traditional Verification Methods Are No Longer Enough

As fraudsters continue to innovate, traditional identity verification methods are struggling to keep up. Generative AI enables criminals to imitate individuals in real time with disturbing accuracy. This makes facial recognition and document verification systems increasingly susceptible to high-quality forgeries.

Experts highlight that the widespread availability of generative AI has enabled the mass production of fake documents, photos, and videos, exposing significant weaknesses in current security systems. One particularly concerning example is OnlyFake, a secretive platform that uses advanced neural networks to produce convincing fake identity documents. For as little as $15 per piece, users can create documents that can deceive digital verification systems. OnlyFake illustrates how generative AI has made the skills once reserved for expert forgers accessible to anyone.

Beyond biometric fraud, Smile ID points to other rising fraud techniques, including document fraud and identity cultivation. Document fraud involves the manipulation or creation of fake identity documents, such as altering authentic documents or submitting manipulated photocopies or scans. Identity cultivation refers to gathering large amounts of personal information often illegally used to create synthetic identities or take control of existing accounts.

Financial Losses Are Soaring

The impact of these fraud techniques is already being felt in Africa’s financial sectors. Despite improvements in Know Your Customer (KYC) processes, financial losses due to fraud have been on the rise across major markets. In Nigeria, banks reported losses of N42.6 billion ($28.2 million) in fraud-related incidents in just the second quarter of 2024, surpassing the total losses of N9.4 billion for all of 2023. Similar trends have been seen in South Africa, Ghana, Zambia, and other key African markets.

East Africa recorded the highest rate of combined biometric and document fraud attempts in the region at 27% in 2024. This is largely due to outdated and poor-quality identity documents in countries like Zambia, Rwanda, and Sudan. Meanwhile, West Africa saw a sharp increase in fraud rates, with cases rising from 12% in 2023 to 22% in 2024, primarily due to the growth of biometric fraud attempts. The Central and Southern regions of Africa have respective rates of 22% and 21%.

Digital banks have become prime targets for these fraud schemes, accounting for 35% of all fraud attempts in 2024. Microfinance institutions followed closely behind at 30%. National ID cards, which are widely used across the continent, recorded the highest fraud rate at 27%. Driver's licenses followed at 24%, due to their frequent use in both formal and informal settings, which increases their vulnerability to misuse. Passports accounted for 20%.

Urgent Action Needed

As the threat of AI-powered fraud grows, governments, financial institutions, and tech companies must act quickly. Solutions are being developed, such as the use of AI to detect deepfakes and enhance biometric verification systems. However, the speed at which criminals are adapting their tactics makes it a race against time.

In Africa, where digital security systems are still evolving in many countries, the potential impact of these fraud schemes could be devastating. Smile ID stresses that international collaboration and increased investment in detection technologies will be crucial in addressing this growing threat. While generative AI holds enormous potential across many fields, it also presents a significant challenge for the continent, which must balance reaping its benefits while protecting against its misuse.