The "Digital Arrest Scam" and rising "mule account detection" highlight the urgent need for advanced digital identity verification in banking. Outdated KYC methods expose banks and NBFCs to sophisticated fraud, necessitating a shift from mere compliance to survival. Key is "Passive Liveness Detection," which combats deepfakes by verifying real human presence through micro-reflections and blood flow patterns. Modernizing account opening demands "Safe Speed" with forensic document analysis, real-time PAN card and Aadhaar verification via NSDL/UIDAI databases. Video KYC (V-CIP) must integrate geo-location and passive liveness checks to prevent synthetic identities and fraud. For loan disbursals, go beyond credit scores. "Bank account verification," or 'penny drop' checks, are vital. Depositing ₹1 confirms the legal name associated with the account, blocking transfers to third-party mule accounts. The industry is moving towards "Continuous Behavioral Verification" by late 2026, where ongoing user behavior validates identity. Modular API solutions for liveness checks and bank verification are crucial for seamless integration and robust fraud prevention. Protecting balance sheets and customers from scams like the "Digital Arrest Scam" is the imperative role of banks in 2026.
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