Cyber-Enabled Fraud

This report was developed by the SIPA Capstone team in collaboration with Google Cloud’s Office of the CISO, which examined whether cyber-enabled fraud is transitioning from a consumer protection issue into a source of systemic risk to global financial institutions. Drawing on stakeholder interviews, industry reports, and academic literature, the team assessed the evolving fraud landscape across major financial markets.

The team developed an original four-pillar analytical framework examining scale of losses, spillovers into the real economy, infrastructure connectedness, and digital trust erosion. The central finding was that cyber-enabled fraud is systemic with four converging forces collectively pushing it toward that threshold: AI-enabled scaling of fraud operations, generational wealth erosion, cryptocurrency’s expanding role in fraud facilitation, and the progressive erosion of trust in financial institutions.

The team mapped the modern fraud lifecycle across five phases and identified a core structural gap in current defense architectures. Social media platforms, telecommunications providers, and financial institutions each hold visibility into different phases of the fraud chain, yet no existing coordination body links all three in real time. By the time a financial institution encounters a victim at execution, the earlier phases of the attack have already been completed without detection.

In response, the team proposed two complementary solutions: a formal cross-sector industry consortium providing a shared intelligence-sharing architecture across all three sectors, and internal cyber-fraud fusion centers within financial institutions to integrate cyber and fraud functions currently operating in silos. Together, these proposals aimed to shift fraud defense from post-loss recovery to upstream prevention.