Face recognition technology and risk prevention in Cryptocurrency

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Cryptocurrency is a revolutionary technology that gained global acclaim in the recent past. Cryptocurrency acclaimed global fame among investors and consumers within a decade of its foundation. In 2009, “Bitcoin” – the first cryptocurrency was created which now has a market capitalization of $64 billion (as of January 2019). 

It is one of the most effective advancements in the field of Fintech (financial technology) it has assisted many people for secure transfer of funds while it has also opened opportunities for many criminal activities like terrorist funding and money laundering.

But this technology is exploited by criminal entities in the execution of planned financial crimes. 

The Features of Cryptocurrency 

Cryptocurrency is a decentralized digital currency, which means it is not controlled by any regulatory authority. This makes the crypto transfers fast and easy for the people. Due to the lack of regulatory obligations, the cryptocurrencies often don’t perform in-depth security measures on the fund transfers and delivers services at quite low prices. 

Merchants that live in high-risk countries are utilizing it to conduct business with other countries. Fiat transfer requires the hefty process and often banks do not cater to the customers from high-risk countries until and unless an intermediary is involved to guarantee the payment from those clients. 

Money laundering and terrorist financing

Bitcoin.com news revealed that $3.6 billion worth of cryptocurrencies have been stolen in the first two months of 2018. The cryptocurrency transfers are being closely monitored but there have been incidents in the recent past when huge money laundering scandals related to cryptocurrency have surfaced. The cryptocurrency transfer trail becomes tainted once it involves more countries and with quite different regulatory infrastructure.

For example, 12 individuals from Russia allegedly used cryptocurrency (Bitcoin) to launder money to the USA for their involvement in the 2016 USA presidential elections. These individuals bought domains and IT infrastructure to transfer funds to the USA in a way such that financial regulators could not trace them back. 

Use of fake identities

Fake identities are used for the financial crime committed on the crypto platforms. Criminals use stolen or fake identities to stay anonymous while conducting crime and cryptocurrency platforms are unable to trace the criminals afterward.  

Other crimes committed at the crypto platforms are credit card fraud, account takeover fraud, etc. 

How to reduce these frauds? 

Cryptocurrency is thriving in the digital era and proactive fraud prevention is inevitable. The cryptocurrency facilitators need to perform identity verification on their customers to mitigate the risk. It ensures transparency in the fund transfer and increased growth by onboarding legitimate customers. 

On the other hand customer, due diligence is also the regulatory obligation of the cryptocurrency businesses. The regulatory authorities such as FATF (Financial Action Task Force), FINTRAC, FinCEN and the EU regulatory authority require the cryptocurrency businesses to perform identity verification on their customers before inboarding them. 

So it is clear that customer due diligence is the key to reduce planned crimes on crypto platforms. And what better way would be to handle this crime than with equally capable technology such as Face Recognition Technology

How face recognition works?

Face recognition technology is using artificial intelligence and machine learning for verification of their customers in real-time. Face recognition detects the face and collects the unique facial features of the person to generate an algorithm and matches it with the databases. 

Also, it uses liveness detection and 3D depth perception technology to identify spoof attacks such as paper backed images and photoshopped images. 

Recognition
Biometric

Using this technology will help the crypto businesses in performing real-time and swift verification. It verifies customers in real-time and delivers high-quality results within seconds. It reduces false positives and helps crypto platforms onboard secure clientele. 

To wrap up the crypto businesses are expected to experience tremendous growth in the coming years and fraudsters are all set to use this technology to commit planned crimes. So the crypto platforms need to understand this threat and take proactive measures to mitigate fraud. 

Biometric sign-in technology could prove to be the best suitable technology for this purpose as it is cost-effective, hassle free and delivers highly accurate results in real-time. So, technology is the solution to mitigate evolving frauds in 2020..

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