What is Document Fraud?
Document fraud is the act of creating, altering, or using false or genuine documents, with the intent to deceive or pass specific controls. Depending on the situation, the type of document forged and the intent behind it, the offense and related penalties can differ. Forging official administrative documents (identity cards, passports, or driver’s license) is considered the highest forgery offense in most national legislations, with the intent of selling it as an aggravating factor.
At the European level, the Regulation (EU) 2020/493 on the false and authentic documents online (FADO) system, aims to create a mechanism to archive information on authentic documents such as identity card, driving and vehicle licenses issued by EU member countries, as well as third countries (non-EU countries, international organizations, etc.), as well as on false version of those documents, in order to combat document and identity fraud.
What are the common types of document fraud?
Document fraud can come under different forms depending on the authenticity of the document. Indeed, Interpol accounts for the following types of document fraud when it comes to fake documents:
- Counterfeit documents: reproduction of an official document without the proper authorization from relevant authority;
- Forged documents: deliberate alteration of a genuine document in order to add, delete or modify information, while passing it as genuine. Forged documents can include photo substitution, page substitution, data alteration, attack on the visas or entry/exit stamps;
- Pseudo documents: replicates codes from official documents such as passports or national identity cards, although not being officially recognized by any international organizations or countries (e.g. the World passport).
Regarding genuine documents, Interpol identifies the following types of document fraud:
- Genuine documents obtained fraudulently (theft, robbery, corruption, etc.). They are sometimes referred to as FOG (fraudulently obtained genuine) ;
- Official documents are misused by an imposter, also known as similarity fraud.
What are the penalties for document fraud?
Depending on the country, penalties encountered for document fraud may differ. Few examples from national legislations that can be found in Europe:
- In the U.K. the Forgery and Counterfeiting Act of 1981 defines different offenses related to forgery, copying a false document, or using a false instrument. According to Article 1, the offense of forgery is defined as: “a person is guilty of forgery if he makes a false instrument, with the intention that he or another shall use it to induce somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.” Penalties include fines, imprisonment sentences up to ten years or both, depending on the offense, and types of documents forged;
- In France, the offense of forgery and using forged documents is defined in Article 441 from sections 1 to 12 of the Penal Code. The forgery of a document is defined as: “any fraudulent alteration of the truth, likely to cause harm and accomplished by any means whatsoever, in a writing or any other medium of expression (…).” Penalties may vary, depending on the types of documents, but includes fines for up to EUR 75,000 if documents are usually delivered by the French administration, and prison sentences for up to 5 years;
- Finally, in Germany, the offense of forgery is defined in Section 267 of the Criminal Code as “Whosoever for the purpose of deception in legal commerce produces a counterfeit document, falsifies a genuine document or uses a counterfeit or a falsified document shall be liable to imprisonment not exceeding five years or a fine.” Under German legislation, even the attempt of forging a document shall be punishable. The German Criminal Code plans for sentences from six months to ten years, depending on the seriousness of the offense (financial loss caused, forging on a commercial basis, etc.).
What is the harm of document fraud for companies?
While companies requiring identification documents among others in the frame of their business activities may be regarded as victims, relevant authorities may also consider them as accomplices of criminal activities they enabled. Indeed, failing to set a strict KYC process might imply important financial losses as well as fines from relevant authorities.
Several illustrating examples are provided by the cryptocurrency industry. As we mentioned in our related article: Buying Crypto without KYC Check?, the U.S. Office of Foreign Assets Control fined different cryptocurrency exchanges for enabling individuals subject to U.S. sanctions programs to trade freely. They allegedly evaded KYC controls using forged documents, allowing them to access those trading platforms. Moreover, customers using fake identification documents in the banking industry in order to obtain loans are discovered on a daily basis, which consequently involves regulatory and financial risks.