Criminals are increasingly using stolen social insurance numbers and doctored birth certificates to obtain legitimate driver's licences and passports, an internal RCMP report says.

And by leveraging pilfered or forged identity markers into higher-value IDs, criminals can sidestep tough anti-counterfeiting features built into government-issued identity documents, including a pending upgrade of passports with biometric chips.

"Identities are being overtaken, altered or created, facilitating a number of other crimes, including many variations of fraud, typically for financial gain or to conceal a true identity," says the March 2011 report prepared by the RCMP's criminal intelligence division.

It points to a rising use of "breeder" documents — identity records such as social insurance numbers, birth or citizenship certificates — that are stolen, tampered with or falsified, then used to sign up for credit cards or valid forms of identity.

The report suggests Ottawa's recent move to stop issuing SIN cards, instead sending the information in a letter, may not hinder identity thieves who skim someone's mail or pick through their garbage looking for the nine-digit number.

The report says the failure of governments to cross-check the authenticity of personal documents used in applications allows fraudsters to stitch together a "synthetic" identity, often combining a stolen social insurance number or altered birth certificate with a made-up name and date of birth.

That means a social insurance number can be successfully paired with an entirely different name on a government application form, since the two are not routinely checked for a match, it says.

And online applications make it easier for criminals to avoid face-to-face interactions when committing identity fraud, the report notes.

Though obtaining credit cards is the number 1 goal for fraudsters, they're also exploiting gaps in the way numerous official identity documents are issued — or using existing cards with no security features or photo — to acquire a federal passport or provincial driver's license, according to the RCMP research.

"There are too many ID cards/documents in circulation. More documents lead to more standards, which opens the door to more fraud," the report says, adding organized crime groups seize upon identity-protection shortfalls.

A censored copy of the report obtained by The Canadian Press under the Access to Information Act does not contain statistics on how common the fraud tactic is, but estimates suggest it is growing rapidly along with other forms of identity crime.

Getting the provincial and federal governments on the same page when checking someone's identity is a big undertaking that nonetheless needs tackling, said Lindsay Lee, director of the Canadian Identity Theft Support Centre, which runs a hotline for identity fraud victims.

"There's no unified system for (governments) to check everything across the board. It's really challenging to get everyone in line," she said.

"It's just a big jumble right now."

Some 17,000 Canadians lost more than $13-million to identity fraud last year, twice the dollar loss reported in 2007, according to figures collected by the Canadian Anti-Fraud Centre, a federal organization which tracks identity crime.

But the real total is likely higher due to under-reporting, the RCMP report says, citing a 2008 survey by Hamilton's McMaster University that found only 13 per cent of identity fraud cases are reported to police.

Lee said one simple step Ottawa and the provinces could take is to start partly blanking out social insurance numbers in government letters, just as credit card numbers are hidden on receipts.

Having a credit check done at least once a year and keeping an eye out for missing bills are two ways people can protect themselves against the more than two-dozen types of identity crime, she said.

And once bills and government letters have been read? "Shred them."

RCMP Sgt. Luce Normandin is helping draft a national identity crime strategy. She says the plan aims to boost awareness among governments, businesses and Canadians themselves and cut down identity theft rates.

"Hopefully the community as a whole becomes more sensitive to the fact (of ID fraud)," she said.

"We don't feel targeted as much as we maybe sometimes are."

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