Identity crime is costing Australia more than $2 billion a year, with drivers licences and Medicare cards the most likely to be used.
The latest Identity Crime and Misuse in Australia report, released by Justice Minister Michael Keenan on Wednesday, shows a further $390 million is spent annually on top of the $2.2 billion figure - preventing and responding to the problem.
It also reveals one-in-five Australians have been a victim at some point.
"These are sobering figures. But, if you pair this with the finding that identity crime is grossly under reported - with one third of victims not reporting the crime either because they were too embarrassed or did not know how (or where) to do so - the problem becomes even more concerning," he said in a speech to the Biometrics Institute Showcase in Canberra.
But it's not just the financial losses.
"Consequences can range from mental health impacts, to wrongful criminalisation, to significant emotional distress when attempting to restore one's compromised identity."
Mr Keenan said the report again makes clear drivers licences are amongst the identity credentials most likely to be used in identity crime.
The problem was demonstrated in September 2013 when more than 1700 fraudulent identity items were seized by police from one syndicate in NSW.
Some were produced so well even trained officers had trouble telling the difference.
'Project Birrie' - set up to match the 1700 identities with other government records - revealed:
* 13 Outlaw Motorcycle Gang members or associates were linked to fraudulent licences
* 29 high profile criminals were linked to historic or ongoing illicit drug investigations
* More than $7 million losses were associated with fraud against individuals and financial institutions, and
* More than $50 million in funds were discovered to have been laundered offshore and likely to be proceeds of crime.
"Project Birrie linked identity fraud to serious and organised crime, including drug trafficking, people smuggling, child exploitation, and even terrorism," Mr Keenan said.
"This is not an exaggeration - we know that people previously convicted of terrorism offences in Australia have used false identities to assist in planning terrorist attacks."
Mr Keenan used the report and the findings of Project Birrie alongside announcing that the biometric Face Verification Service is now live.
It is the initial service for the Foreign Affairs department and federal police to use to match facial images held by the immigration department.
