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Measures to Take Against Data Fraud

Your bank card is a strength; at the same time, it’s a weakness. It’s great to leave cash at home and ditch all the risks of losing it — but exposing your card details can lead to much more disastrous consequences. Electronic fraud is now so ubiquitous that preventing it becomes a shared responsibility of the client and the service provider.

In general, KYC/AML procedures are meant to reduce (in a perfect world – eradicate) data fraud. In real life, fake or stolen identities and risks they bring do the tricks, indicating that criminals have become more elaborate. To prevent loss of money and an even greater loss of reputation, service providers (that is, anyone who provides any sort of service for money) should take the responsibility of providing security.

Know Your Customer

That’s what KYC stands for. The idea of KYC means that banks and other financial institutions must collect enough information on their customers to detect and prevent fraud and money laundering on their own. If necessary, they should provide this information to authorities as well. But the primary cause (as for most customers) is prevention of crimes that does not require police or special forces, done by banks and stores right there.

If a bank or a store locks a transaction that seems suspicious, it’s its legal right. But how to recognize a suspicious transaction? That’s where Big Data analytics and Artificial Intelligence algorithms enter the field. If  trained correctly and integrated with a database large enough, an AI can detect identifiers that have been compromised and report them, or make a decision according to the rules.

Automation Is the Key

The first mistake that leaves businesses vulnerable to fraud is lack of trained staff. Despite growing IT literacy, security competence is still rare. That’s why automation will reduce the room for human mistakes. If KYC-based procedures are done automatically, chances are they will be performed correctly. In addition, the right kind of automation will leave less space for intended criminal actions by those trusted to make decisions.

Integrating these solutions into payment gateways and other systems that require user credentials may be quite a work. So it’s crucial to pay it all due attention.When installed and optimized correctly, the system can process the data and come with a decision on this particular client in under 1 second.

Is the Big Brother…?

The result of correctly implemented KYC/AML technologies seems to bring profit to customers, to providers — and to authorities?. Some consider this to be yet one more step to “1984”, with all the people having any money under constant control. Yes, this will reduce crimes, but won’t this provoke even more abuse?

The answer is: no, if made correctly. Trusting machines with these decisions might be even wiser than trusting humans or no one at all. Machines cannot be bribed or scared into submission, they cannot be fooled by pleas or promises. They should only be trained and configured correctly to do their job flawlessly.  

But what do you think about it? Have you ever been targeted by con artists – or wrongly accused of being one? How did you get out? Have any of your friends implemented KYC procedures? Do you know any pros and cons of this approach? Let’s talk about it in the comments, or raise it among your friends on Facebook or Twitter! 

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