Mastercard Strengthens Fraud Detection in Crypto Transactions with AI Partnership

Mastercard is intensifying its efforts to combat cryptocurrency-related fraud, announcing an exclusive partnership with regulatory technology platform Feedzai. The collaboration aims to leverage artificial intelligence (AI) in countering online money laundering and financial scams within the crypto space.

Feedzai will seamlessly integrate with Mastercard’s CipherTrace Armada platform, providing banks with a robust tool to monitor transactions across 6,000 cryptocurrency exchanges. Unlike traditional methods, CipherTrace Armada will be embedded directly into Feedzai’s technology, allowing real-time alerts for potential fraudulent activities.

Feedzai’s CEO, Nuno Sebastio, explained the integration by stating that Feedzai will “inhale” data, enhancing fraud detection to safeguard consumers. The system not only protects against unwary consumers but also identifies potential money laundering and mule accounts, used by fraudsters to launder illicit funds.

Feedzai data reveals that approximately 40% of scam transactions move directly from bank accounts to cryptocurrency exchanges. This collaboration seeks to curb such activities, providing a more secure environment for crypto transactions.

In addition to fraud prevention, Mastercard gains access to Feedzai’s AI capabilities, capable of identifying and blocking suspicious transactions within nanoseconds. This move signifies Mastercard’s commitment to legitimising crypto as a mainstream financial asset, subject to the same rules and compliance frameworks as traditional assets.

Banks and financial institutions globally have shown increased interest in crypto, but widespread adoption faces hurdles due to the lack of comprehensive regulations and concerns about fraud and scams. Mastercard’s partnership with Feedzai reflects a step towards mainstream acceptance and the application of robust security measures in the crypto space.

Despite global strides, the U.K. banking sector exhibits caution in associating with crypto. Major banks, including JPMorgan, NatWest, and HSBC, have restricted or blocked crypto transactions, citing fraud risks. Mastercard’s initiative aims to address these concerns and bridge the gap between traditional finance and the burgeoning crypto market.

Ajay Bhalla, President of Cyber and Intelligence Solutions for Mastercard, emphasises the need to distinguish between legitimate and fraudulent transactions in the crypto space. With the partnership with Feedzai, financial institutions aim to enhance their ability to discern the credibility of crypto transactions, mitigating the risks associated with the digital currency landscape.

This collaboration builds on Mastercard’s acquisition of CipherTrace in 2021, highlighting the company’s ongoing commitment to blockchain technology. The partnership introduces innovative solutions like CryptoSecure, launched in the following year, reinforcing Mastercard’s dedication to securing transactions from fraud-prone crypto exchanges.

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