Crypto, Kleptos And The Digital Identity Showdown

As goes banking, so goes fraud. It has ever been thus. Money laundering and terrorist financing also go on the list these days, perhaps like never before. PYMNTS December 2020 AML/KYC Tracker® done in collaboration with Trulioo probes the heightened fraud climate accompanying the mobile-digital shift, zeroing in on key aspects of prevailing in the digital fraud wars.

“Money laundering is a global plague, with the estimated amount in a given year ranging from $800 billion to $2 trillion — or anywhere from 2 percent to 5 percent of the global gross domestic product (GDP),” the new Tracker states. “The growing popularity of online banking has pushed money laundering into the digital realm as drug dealers, terrorists or human traffickers who might once have set up brick-and-mortar businesses to launder their ill-gotten funds can conduct the same operations today completely virtually, even establishing multiple websites as backups in case authorities catch on.”

Into the breach steps identity verification solutions that have spent this year using artificial intelligence (AI), machine learning (ML) and other financial automation that’s making it more difficult by the day for criminals to wash stolen loot through the accounts of legit customers.

Automation Is Having Its Moment

Helping illustrate the matter, PYMNTS December 2020 AML/KYC Tracker® notes that anti-money laundering (AML) and Know Your Customer (KYC) measures put in place during the pandemic and focusing on remote identity verification are slowing this criminal activity.

“AML automation is a breakthrough technology for many businesses, enabling them to be compliant with federal regulations while avoiding the tedious and expensive manual effort of inspecting every transaction for potential violations,” the Tracker states.

Not all executives are equally at ease, as the Tracker notes that “47 percent of senior decision-makers at a variety of companies have some level of distrust in automated authentication procedures … with 21 percent saying that they do not trust them at all. This distrust is reflected in usage rates among businesses,” 23 percent of which don’t use automated AML processes.

Unease with automated identity solutions is understandable but increasingly irrelevant as the scale, scope and sheer popularity of digital commerce necessitates automation.

Defending New Digital Currencies

Of the more adventurous paths in global finance and the protection of it, cryptocurrencies and stablecoins getting attention as they heat up and blockchain lays out new digital-first rails.

Many people love the idea of crypto, perhaps none more so that cybercrooks to whom purely digital dollars sound like a cyberthief’s own personal amusement park. The zeal with which crooks are now targeting cryptocurrencies signals the need for additional layers of security.

Per the new Tracker, “World governments have already taken a number of steps to curb money laundering on cryptocurrency exchanges by requiring them to bring their KYC processes in line with those of other FIs,” and adding that FinCEN rules announced in late 2019 will be strictly enforced for cryptocurrency exchanges. FinCEN’s rule “forces exchanges to verify customers’ true identities as well as identify any senders and recipients of cryptocurrency transfers worth $3,000 or more. It was originally put into place in 2013 but was only intermittently enforced over the next six years, letting many cryptocurrency exchanges continue their KYC-less practices with impunity,” according to the December 2020 AML/KYC Tracker®.