When Identity Stopped Being Verifiable
KYC and AML frameworks, built on the premise that identity verification is a solved problem, suddenly collapse under the weight of adversaries who can generate perfect humans on demand.
By Mads Sidor Radich, AML Compliance Officer at Monta
In mid 2026, an open source breakthrough in generative modelling triggers a rapid and unexpected evolution in financial crime: the emergence of fully coherent synthetic identities. Unlike earlier deepfakes, which were isolated images or doctored videos, this new generation produces identities with complete, internally consistent digital lives. Each persona comes equipped with photorealistic face and voice profiles, convincing live video behaviour, fabricated employment histories, verifiable seeming digital footprints, and algorithmically generated relationship networks.
The shift goes unnoticed until several institutions begin reporting unusual onboarding clusters: customers with flawless documentation, impeccable credit histories, and clean screening results, yet with subtle biometric overlaps. Traditional fraud indicators fail; transaction patterns remain low risk and compliant. It is only when cross border information sharing reveals identical biometric signatures tied to dozens of supposedly unrelated individuals that regulators recognize the scale of the breach.
The implications are immediate.
Foundational assumptions of KYC and AML are destabilised.
Identity verification, long treated as a solvable technical step, becomes an open problem again.
Supervisors question whether institutions can still meet their regulatory obligations using existing onboarding technologies. Banks struggle to determine whether a “customer” must be validated as a biological human, a digital entity, or merely the holder of a credential.
Regulators respond by accelerating the development of cryptographically anchored identity systems and authenticated source document standards. Institutions are pushed toward continuous identity assurance rather than point in time verification. The industry realises that its long standing reliance on documents, biometrics, and digital traces has become insufficient. A fundamental reconstruction of identity assurance now becomes unavoidable, with regulators and institutions forced to redefine what it means to verify a person in the digital age.
