Wealth and asset management fraud insights: 3rd edition

This report highlights trends and innovative strategies shaping the future of fraud prevention in the wealth and asset management industry.

In brief

• As fraud evolves, wealth and asset management firms are enhancing prevention and detection tactics while balancing account security and customer experience.
• Firms are more diligently categorizing scams, leveraging Federal Reserve guidelines to implement targeted prevention strategies and boost customer education.
• Industry leaders are working to determine the best ways to use AI in their fraud prevention organizations by exploring relevant use cases.

Introduction

Ernst & Young LLP (EY US) published our first Wealth and Asset Management (WAM) Fraud Insights Point of View (POV) in 2022, offering a detailed examination of how WAM firms were addressing fraud challenges largely stemming from the increased volumes experienced post-pandemic. The 2024 edition built on this foundation, incorporating insights from both new and returning interview respondents to highlight significant market shifts and evolving fraud strategies.

In this third edition, 2026, we delve deeper into the fraud trends of the past year, exploring fresh topics and strategies that are top of mind for WAM firms. Our team interviewed more than 20 fraud and enterprise risk management executives to gather insights from WAM firms managing assets ranging from US$1 trillion to US$10 trillion.

Consumer fraud continues to be a growing threat, with the Federal Trade Commission (FTC) reporting that customers lost more than US$12.5 billion in 2024, a stunning 25% increase from the previous year.¹ Investment scams alone accounted for US$5.7 billion in losses, reflecting a 24% increase from the previous year.² At this rate, 2026 losses are on track to exceed US$19 billion.

As fraud is not a new issue, WAM firms have made significant headway in enhancing their preventive and detective frameworks. The 2026 edition reports a 22% decrease in average case volume compared with our 2024 iteration. While the average number of successful fraud events has decreased for our participants, they also reported a striking 74% increase in average losses. This demonstrates that fraudsters continue to adapt their approaches and are becoming more efficient, taking more funds with fewer attempts.

As consumer fraud evolves, it’s crucial to understand the key issues affecting our participants this year. Below, explore these concerns alongside industry-leading practices that effectively mitigate fraud exposure and strengthen both preventive and detection efforts.

Top three current fraud threats in wealth and asset management

The rapid pace of digital innovation and the rise of artificial intelligence (AI) have emboldened fraudsters, enabling them to execute increasingly sophisticated schemes targeting both firms and their clients. In the WAM sector, the most pressing fraud threats identified by recent industry executive interviews are scams, account takeover (ATO) and wire fraud.

Technology and AI integration

All executives interviewed are leveraging artificial intelligence (AI) in their fraud prevention efforts, with 43% using it to enhance detection models and 29% implementing it for transaction anomaly detection. The exploration of generative AI (GenAI) is also on the rise, with 50% of firms investigating the technology’s potential for monitoring and incident analysis.

In addition, organizations are increasingly adopting in-house models or vendor solutions to automate processes and improve efficiency. While AI enhances fraud detection, 43% of respondents noted that the nature of fraud threats has remained largely unchanged, as most fraudsters are leveraging new tools and altered approaches to execute familiar schemes rather than executing entirely new types of fraud.

Most common uses for AI

Digital assets and cryptocurrency

Executives interviewed revealed a cautious approach to digital assets and cryptocurrency, with 100% reporting a low-risk appetite and noting there are no plans to actively engage in direct cryptocurrency transactions in the foreseeable future. Currently, participant involvement in digital assets is primarily limited to exchange-traded funds (ETFs) or managed funds (71%). Some firms are beginning to monitor wallets and evaluate payments to digital asset firms to identify potential scams.

Fraud loss metrics

Fraud losses in fiscal year 2023 and fiscal year 2024 varied widely, with 62% of firms reporting losses under US$5 million in 2024, while 37% faced losses exceeding US$25 million. Notably, 33% of respondents interviewed reported a decrease in fraud losses from 2023 to 2024. New account fraud (NAF) emerged as a significant issue, with the highest average case volume (5,240) and an average loss by respondent of US$4,050,000. Scams accounted for the second highest average case volume (2,444); however, they had the highest average loss by respondent of US$8,620,000, showing a strong correlation with suspicious activity reports (SARs).

Organizational alignment and collaboration

The fraud prevention organization was mostly aligned with either the compliance function (44%) or within risk (33%). Most firms (85%) place identity and authentication management under the chief information security officer (CISO) or cybersecurity functions. While 44% of industry leaders have integrated fraud and anti-money laundering (AML) functions into a fusion center, 56% of executives interviewed have no plans to alter their organizational structures. However, they are increasing the collaboration among fraud, AML and cybersecurity teams.

Firms integrating fraud and AML into a fusion center

Strategic initiatives and challenges

Interviewees identified the implementation of AI and adapting to technological advancements as their top challenges (50%). Additionally, 44% highlighted difficulties in aligning global operating models with fraud risk management. The rise of authorized payment fraud complicates detection, as transactions often appear legitimate and lack traditional red flags.

To combat these challenges, firms are investing in advanced identity verification tools and synthetic ID detection systems (50%). They also are enhancing detection methods through proactive approaches, including anomaly detection and behavioral biometrics.

Strengthening defenses with red teaming

Red teaming allows an organization to simulate real-world threats to assess control effectiveness and is a leading practice for firms looking to bolster their fraud mitigation strategies. By re-creating specific scenarios, either through tabletop exercises or live fire testing, this proactive method allows organizations to identify weaknesses and assess vulnerabilities before fraudsters can exploit them. 

Despite its advantages, 67% of firms have not yet implemented formal fraud-focused red teaming exercises. Many still rely on alternative methods, such as tabletop exercises and scenario analysis, which often address broader cyber threats rather than specific fraud risks. Some firms are interested in fraud-specific red teaming but face challenges, such as coordination complexity and a lack of urgency based on past losses.

The benefits of red teaming are clear: It can reduce fraud losses, enhance regulatory compliance and build customer trust. Relying solely on tabletop exercises or cyber-focused testing may leave critical fraud vulnerabilities unaddressed, particularly in customer-facing processes.

Focus on elder abuse and insider threats

All firms surveyed are prioritizing age-based behavioral analytics to combat elder abuse, with 78% of firms utilizing age-specific risk signals, such as behavioral changes or sudden account changes by older customers, and 100% implementing trusted contact models. 

Additionally, all participants maintain robust insider threat risk management programs, with a notable increase in collaboration with other business units, particularly cybersecurity. However, despite the consensus on the importance of proactive detection, just 63% of participants provided clear sources for escalating insider threats, signaling a need to refine reporting processes. 

Conclusion

As fraud threats continue to evolve, WAM firms must remain vigilant and adaptable. By leveraging technology, enhancing collaboration and focusing on detailed categorization and prevention strategies, organizations can better navigate the evolving fraud landscape while safeguarding their clients and maintaining regulatory compliance.