Digital financial fraud migrates from Brazil to Colombia and Mexico within weeks
Financial fraud in Latin America follows predictable routes between countries, with Brazil serving as the epicentre of sophisticated methods that are then replicated in Colombia and Mexico.
How digital fraud travels across Latin America in weeks
A new fraud vector detected in Brazil takes between three and four weeks to appear in Colombia, and another four weeks to reach Mexico. This was described by Iñigo Castillo, general manager of identity verification company Incode, in an interview with bloomberglinea.com during the Latam Fintech Market held in Barranquilla.
"It is quite homogeneous. What is curious is that fraud travels," Castillo stated. According to his explanation, Incode's presence in multiple markets across the region allows it to identify these patterns of propagation before they become established in new countries.
Brazil, laboratory of regional fraud
Castillo noted that Brazil presents "a level of sophistication somewhat more advanced than the rest of the region." The capabilities and methods developed there are subsequently adopted by criminal organisations in Colombia, Mexico and Peru, three markets that he identifies as especially exposed due to the accelerated growth of digital financial services.
The sequence, according to the executive, is consistent: what is observed in Brazil today is a preview of what the rest of the region will face within a matter of weeks.
Artificial intelligence reduces the cost of fraud
One of the structural changes that Incode identifies is the fall in the cost and complexity of executing fraudulent operations. A few years ago, building a synthetic identity, forging a document or producing a deepfake required specialised tools and considerable investment.
Today, that barrier has been reduced significantly. "Now imagine that taken to an exponential level with new artificial intelligence models," Castillo said.
As a concrete example, he mentioned that a fraudster can purchase a compromised mobile phone for US$100 and use software to inject false photographs during an identity registration process. These tools are available both to structured criminal organisations and to individuals operating independently.
The race between prevention and attack
Artificial intelligence has also accelerated the response of those attempting to prevent fraud. Castillo explained that vulnerabilities that previously took months to close can now be resolved in days.
"We can close a new fraud vector in a day or a week that previously took the industry months, two or three months," he stated.
However, he warned that closing a vulnerability is not equivalent to resolving the underlying problem. "The challenge is not to close that one vulnerability, but to understand that once you close it, there are another 100, because the tools of fraudsters have also grown exponentially," he said.
Incode faces this dynamic with ethical hacking teams that attempt to breach its own platform, in addition to collaborating with external agencies, universities and penetration testers whose function is to detect possible flaws before third parties exploit them.
Colombia's challenge: digital identity and regulation
For Castillo, one of Colombia's central challenges is verifying that a person really is who they say they are when operating remotely or through digital channels. "The challenge of identifying a person remotely or by digital means is increasingly significant," he stated.
The executive proposed using government sources of truth—such as biometric databases—to strengthen these processes. The idea is that financial institutions can compare the identity presented by a user with official government records.
"If I check all of this, and then I go with a source of truth and it tells me that this face matches the record that the government has, that it really is that national ID card or that driving licence, then the impact on fraud prevention is absolute," he noted.
However, he acknowledged that Colombia faces technological and regulatory obstacles to implementing mechanisms of this type, linked to privacy and the handling of sensitive databases.
Banks and fintech, equally exposed
When asked whether traditional banks or fintech companies are more vulnerable to fraud, Castillo responded with precision: "I would say they are equally vulnerable."
He qualified, however, that fintech advances faster and accumulates less experience, which can generate new risks. Banks, for their part, have greater track record and more consolidated internal rules, but operate in environments that combine digital and physical channels with different levels of exposure.
"Undoubtedly, everyone is moving to digital, already is in digital," he stated.
Collaboration between institutions, an outstanding issue
Castillo noted that effective fraud prevention requires greater cooperation between financial institutions. He cited Mexico as a reference, where banks and fintech companies have developed collaboration mechanisms because they recognise that fraud affects the system as a whole, not a single entity.
"The person who commits fraud does not defraud just one bank, that same criminal group is attacking several at once," he stated.
For Incode's general manager, that reality makes financial fraud an organised industry that requires an equally organised response from the sector. The challenge includes regulatory dimensions, data privacy and bank secrecy that no single institution can resolve in isolation.
Source: Google News CO — Crime