Mastercard is stepping up its efforts to identify and combat cryptocurrency fraud through an AI partnership

November 24, 2023

By Anjali Kochhar

Mastercard is stepping up its efforts to detect and prevent fraud in cryptocurrency exchanges. In an exclusive disclosure to CNBC, the company shared with you its collaboration with Feedzai, a regulatory technology platform employing artificial intelligence to combat online financial scams and money laundering.

Feedzai will directly interface with Mastercard’s CipherTrace Armada platform through this agreement. Banks utilize CipherTrace Armada to monitor transactions from over 6,000 cryptocurrency exchanges for fraudulent behavior, money laundering, and other suspicious activities.

Rather than being accessed through an API, or application programming interface, CipherTrace Armada will be directly integrated into Feedzai’s technology, allowing Feedzai to “inhale” the data and provide real-time alerts regarding questionable crypto transactions.

According to Nuno Sebastio, the CEO and co-founder of Feedzai, it is not just about protecting unsuspecting customers—it’s also geared towards enhancing fraud detection. By teaming up with Mastercard’s CipherTrace Armada platform, the goal is to identify potential money laundering and mule account activity. These “mule accounts” are used by scammers to hide their illicit gains.

Based on Feedzai’s current data, nearly 40% of fraudulent transactions follow a direct path from a bank account to a cryptocurrency exchange. This insight provides a valuable perspective on the prevalent challenges and underscores the significance of the measures being taken to address them.

Mastercard will also have access to Feedzai’s artificial intelligence capabilities as a result of the collaboration. In a matter of nanoseconds, according to Feedzai’s algorithms, it can detect and stop questionable transactions while simultaneously identifying valid ones.

Every year, Feedzai’s RiskOps platform scrutinizes transactions exceeding $1.7 trillion, providing a robust examination for your peace of mind. With offices strategically located in Silicon Valley’s Coimbra, Portugal, and San Mateo, California, Feedzai safeguards its cutting-edge technology with approximately 100 patents, consistently securing an average of 10 patents each year.

It’s noteworthy that numerous banks, perhaps including yours, might believe they are effectively preventing illegitimate cryptocurrency transactions. However, according to Sebastio, they might unknowingly be only blocking transactions involving widely recognized and regulated entities within the crypto space, inadvertently omitting the rest. This insight sheds light on the potential gaps in the current approaches to managing cryptocurrency-related risks.

Is cryptocurrency becoming more widely used?

With this action, Mastercard is attempting to establish cryptocurrency as a legitimate financial asset that can be governed by the same regulations and compliance standards as more conventional assets.

Large financial organizations like banks are becoming more interested in integrating cryptocurrency into their offerings. However, integrating widely accessible cryptocurrency items into their main offerings—the next stage—has proven to be more difficult to achieve.

Because digital assets are not fully regulated and can be used in fraud and scams, banks have been cautious when dealing with them.

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

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