Identity Fraud and Identity Theft

Identity theft is when someone illegally gets another person’s personal information like their name, bank details, or ID numbers without permission. This can happen through:

• Online scams (phishing)
• Hacking into databases
• Stealing documents or devices

Read more: What is Card Skimming and How to Stay Safe from ATM Fraud?

What is Identity Fraud?

Identity fraud happens when the stolen information is used to do something illegal, such as:

• Opening fake bank accounts
• Applying for loans
• Making purchases or transferring money
• Laundering money or funding crime

Why It Matters in AML Compliance:

In AML (Anti-Money Laundering) efforts, identity fraud is a big risk because:

• Criminals can use fake identities to move illegal money through the financial system.
• It helps criminals hide their real identities.
• It can be used to avoid financial sanctions.

Banks and other financial institutions are required by law to use Know Your Customer (KYC) checks and monitoring tools to stop this from happening.

Real-Life Example: Matthew David Keirans Case

In the late 1980s, a man named Matthew David Keirans stole the identity of another man named William Woods. Keirans used Woods’s name and information to:

• Get a job at a hospital in Iowa
• Apply for and receive more than $200,000 in loans in Wisconsin
• Live under Woods’s identity for over 20 years

When Woods tried to prove his identity, Keirans sent false documents to police, leading to Woods being wrongly arrested and jailed.

How It Ended:

• In 2023, DNA testing proved Woods was innocent.
• In 2024, Keirans pleaded guilty to identity theft and fraud.
• In 2025, he was sentenced to 12 years in prison.

Why It Matters:

This case shows how dangerous identity theft can be. It also shows how fraud can go undetected if there are weak identity checks in place. Strong AML and KYC systems are necessary to catch this kind of fraud early and protect victims.