● Member Perspective

Fraud trends in 2026: What to expect

December 10, 2025

Fraud continues to evolve quickly, challenging even the most prepared financial institutions. The FBI reported that in 2024 alone, Americans lost over $16.6 billion to increasingly complex schemes.

Fraud continues to evolve quickly, challenging even the most prepared financial institutions (FIs). The FBI reported¹ that in 2024 alone, Americans lost over $16.6 billion to increasingly complex schemes. As we move into 2026, fraud prevention programs must adapt to stay ahead of perpetrators.

Technology is helping the financial services industry fight financial crime, but fraudsters are equally quick to exploit vulnerabilities. Preparing now will help FIs maintain the trust of their communities.

AI increases risk, strengthens monitoring

Artificial intelligence (AI) is changing how FIs detect and respond to fraud. Just as fraudsters use AI to create synthetic identities, deepfake personas, voice clones and phishing campaigns, the financial services industry is adopting AI-driven tools to keep pace. These systems can sift through large volumes of data across accounts and channels in real time. If you are not yet on board with AI as a fraud detection partner, 2026 is the year to join.

AI improves fraud prevention by uncovering patterns that traditional rule-based systems may miss. For example, machine learning can flag unusual transaction velocity or unexpected payment destinations that may indicate real-time payment fraud. With each new attempt, AI models sharpen their ability to highlight emerging risks.

But AI models require reliable data and close oversight to prevent errors or bias, and AI is not a cure-all. Regulators are scrutinizing how FIs validate and govern AI, so compliance teams must remain closely engaged.

Human judgment remains central to protecting institutions and their clients. AI should support anti-money laundering (AML) and fraud staff, not replace them. Investigators provide context, intuition and accountability that algorithms cannot replicate. The institutions best positioned for the future will use AI as one layer in a broader defense, combining technology with skilled staff, sound policies and client education.

Real-time payments risks

The growth of real-time payments fraud is expected to continue² in 2026. Faster payments improve client satisfaction and business efficiency but shorten the window for detecting and stopping fraudulent activity. Fraudsters will likely target instant payment channels with account takeover (ATO) schemes, business email compromise and synthetic identity fraud. Institutions should expect attacks during off-hours when fewer staff are available. Strong authentication, behavioral analytics and proactive AML/counter-terrorist financing (CTF) fraud prevention will be critical. As adoption grows, networks such as faster automatic clearing house payments and FedNow will remain prime targets.

Credit-push fraud occurs when a fraudster uses tactics like social engineering or impersonation to convince a victim to willingly transfer money from their account into the fraudster’s account. Nacha is rolling out new monitoring rules effective March 20, 2026, to help curb these threats. FIs will want to prepare for additional monitoring requirements.

Synthetic identities on the rise

Synthetic identity fraud will remain one of the most pressing fraud concerns³ in 2026. Advances in generative AI make it easier for criminals to build convincing fake identities using stolen personal data. These profiles can bypass traditional verification checks, leaving institutions exposed and often uncovering fraud only after significant losses have occurred.

For FIs, the challenge is compounded by the fact that synthetic identities can look like legitimate new customers, sometimes building credit histories over time before exploiting the system. This slow-burn approach makes detection more difficult and underscores the need for stronger, layered controls.

Regulators are clear in their expectations that the financial services industry must take proactive steps in managing these risks. Enhancing client due diligence, improving identity verification processes and integrating cross-channel monitoring will be more critical than ever. Institutions that combine advanced technology with well-trained staff and a culture of vigilance will be better positioned to identify anomalies early and prevent criminals from exploiting synthetic identities.

Cybercrime meets fraud

Cyberattacks are no longer limited to stealing data or disrupting systems. Fraudsters increasingly exploit employees through social engineering, phishing emails and other schemes that exploit human error or outdated security practices.

In 2026, criminals will continue to use stolen credentials and network access to take over accounts and move money through real-time payment systems. This ties cybercrime to fraud more than ever, creating added complexity for FIs and blurring the line between technology risk and financial crime.

The message for AML, fraud and IT teams is clear: Collaboration must be ongoing and intentional. Institutions that separate these functions risk missing critical warning signs or delaying a coordinated response. The financial services industry can strengthen its defenses by building cross-functional teams, conducting joint training and sharing intelligence.

Elder fraud grows with an aging population

Elder fraud is expected to expand as one of the most concerning fraud trends in 2026. The U.S. Census Bureau projects⁴ that by 2030, all baby boomers will be over 65, and the share of the population over 60 will continue to grow. Older adults are frequent targets for fraudsters, who exploit trust, isolation or limited familiarity with digital banking.

For the financial services industry, the risks tied to elder fraud extend beyond reputational harm. Regulators increasingly expect proactive detection and reporting of suspicious activity involving older account holders. From romance scams to ATOs, synthetic identity fraud and real-time payments fraud can intersect with elder exploitation.

To prepare, fraud prevention teams should train staff to recognize red flags such as unusual wire transfers, rapid savings depletion or abrupt account activity changes. Strengthening collaboration between fraud monitoring, client service and community outreach will be key.

Sextortion schemes expand

The rise of social media, encrypted messaging and digital payment platforms will empower fraudsters who convince victims to send compromising material and then demand payment to prevent exposure.

From a financial crime standpoint, sextortion generates illicit funds that often move quickly through peer-to-peer apps, real-time payment systems and cryptocurrency exchanges. These transactions may present unusual transfers to new recipients, frequent small-dollar payments or attempts to liquidate digital assets.

The message for AML, fraud and IT teams is clear: Collaboration must be ongoing and intentional

Fraud prevention programs should include sextortion in financial crime risk assessments. Transaction monitoring systems can be tuned to detect potential indicators, but staff awareness is just as critical. Fraud investigators should recognize warning signs, particularly when they involve younger or vulnerable clients, and institutions should be ready to file suspicious activity reports when warranted.

As with elder fraud, protecting clients from sextortion requires vigilance and collaboration. Institutions that combine fraud detection technology with client education will be better positioned to prevent losses and safeguard their communities.

Internal fraud risks rise

In a 2024 report,⁵ the Association of Certified Fraud Examiners (ACFE) found that internal fraud represents a significant risk to every organization’s operation. ACFE estimated that 5% of an organization’s revenue is lost to internal fraud each year, with more than $3 billion in total losses. The financial services industry accounted for the largest share of cases.

Internal fraud is expected to continue throughout 2026. Because of heavy transaction volumes, it can go undetected for long periods. Understanding the various forms of internal fraud and implementing proactive measures are critical to protecting an institution’s financial health and reputation. Effective prevention requires strong leadership, transparent policies and embedded controls.

Preparing for what is ahead

Fraud trends in 2026 point to a future that is both challenging and manageable. Institutions that prepare now will be better equipped to protect clients, minimize losses and strengthen community trust. Preparation requires a balanced focus on technology, people and collaboration. Key steps include those listed below.

Investing in technology: Real-time fraud detection tools that monitor transactions across all payment channels can identify suspicious activity before losses occur.
Assessing staffing regularly: Staffing assessments help ensure adequate coverage as fraud threats evolve and workloads change.
Strengthening client protection: Enhanced authentication and ongoing client education will be vital in addressing synthetic identity fraud and other fast-growing schemes.
Building cross-functional teams: Collaboration among fraud, AML and cybersecurity staff improves defenses and response times.
Staying informed: Following regulatory updates and industry collaboration provides early insight into new fraud techniques and expectations.

By staying vigilant, investing in the right resources and fostering collaboration across teams, institutions can not only manage risk but also strengthen the trust and security that their clients depend on every day.

Terri Luttrell, CAMS-Audit, CFCS, compliance and engagement director, Abrigo, Austin, TX, USA, [email protected],