Mastercard Launches AI Tool to Help Banks Assess Crypto Crime
Mastercard is launching a new tool to help banks assess the risk of fraud associated with crypto merchants on the company’s network, according to CNBC. The new service, which utilizes AI algorithms, was developed by a blockchain startup Mastercard acquired in 2021.
Mastercard Rolls Out Anti-Fraud Service to Fight Crypto-related Fraud
Mastercard is set to roll out a new service Tuesday to help banks identify and prevent crypto fraud, according to a report by CNBC. The tool allows banks to detect and cut off high-risk transactions from crypto merchants within Mastercard’s network.
The tool, named Crypto Secure, utilizes advanced artificial intelligence (AI) algorithms to determine fraud risks linked to cryptocurrency exchanges, relying on blockchain data such as public records of crypto transactions, as well as other sources. The service is developed by CipherTrace, a blockchain firm Mastercard bought in 2021, which develops anti-money laundering, crypto forensics, and blockchain threat intelligence solutions.
The move by Mastercard, which left the Libra project in 2020, comes amid a critical period for the crypto market which faces an increasing number of criminal activities. According to Chainalysis, the number of crypto funds flowing into crypto wallets with criminal links hit a new high of $14 billion in 2021.
Furthermore, the research found that the number of attacks on decentralized finance (DeFi) protocols surged by 1330% in 2021. This trend has continued into 2022, with the digital asset market witnessing a myriad of hacks and frauds in the past few months.
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Crypto Secure Identifies Suspicious Activity, but Banks Make the Call
With Crypto Secure, banks and other Mastercard clients will be presented with a dashboard showing color-coded ratings that assess the risk of fraudulent activity on the network, with red for high-risk and green for low-risk transactions.
However, Crypto Secure does not automatically cut off transactions from suspicious crypto merchants. Instead, that decision is made by the banks themselves.
Mastercard already has a similar anti-fraud system it uses for fiat currency transactions. The new tool will allow the credit and debit card issuer to expand these capabilities to cryptocurrencies.
It will also help the company’s partners comply with the “complex regulator landscape,” said Ajay Bhalla, president of Mastercard’s cyber and intelligence unit. “The idea is that the kind of trust we provide for digital commerce transactions, we want to be able to provide the same kind of trust to digital asset transactions for consumers, banks, and merchants,” he added.
Do you think Mastercard’s latest move will prompt other fintech giants to take similar action? Let us know in the comments below.