In a bid to fortify its defenses against fraud within the cryptocurrency realm, Mastercard has announced an exclusive partnership with Feedzai, a regulatory technology platform specializing in combating online money laundering and financial scams using artificial intelligence (AI). The collaboration aims to leverage AI capabilities to enhance fraud detection and protect consumers from illicit activities on cryptocurrency exchanges.
Feedzai will directly integrate with Mastercard’s CipherTrace Armada platform, designed to enable banks to monitor transactions across more than 6,000 crypto exchanges for signs of fraud, money laundering, and other suspicious activities. This integration differs from a traditional API-based approach, with Feedzai seamlessly incorporating CipherTrace Armada into its technology to provide real-time alerts about potentially fraudulent cryptocurrency transactions.
Nuno Sebastio, CEO and co-founder of Feedzai, highlighted the broader impact of the partnership, stating, “This will increase fraud detection by protecting unwary consumers, but will also detect potential money laundering activity and mule accounts.” Mule accounts refer to user accounts exploited by fraudsters for laundering illicitly obtained funds.
According to Feedzai data, approximately 40% of scam transactions currently flow directly from bank accounts to cryptocurrency exchanges. The collaboration aims to address this issue by utilizing Feedzai’s advanced AI capabilities, capable of identifying and blocking suspicious transactions within nanoseconds while still recognizing legitimate transactions.
The partnership provides Mastercard with access to Feedzai’s AI expertise, adding a layer of intelligence to its fraud detection capabilities. Feedzai’s RiskOps platform, analyzing transactions totaling over $1.7 trillion annually, stands as a significant asset in the fight against financial crime.
This strategic move by Mastercard signals a commitment to legitimizing cryptocurrency as a mainstream financial asset, subject to the same rules and compliance frameworks as traditional assets. As banks and financial institutions increasingly explore crypto integration, the collaboration with Feedzai positions Mastercard at the forefront of ensuring security and compliance within the evolving financial landscape.
The initiative comes in the wake of a global surge in crypto-related losses, with a 79% increase reported in 2022 compared to the previous year, according to data from blockchain analysis firm Chainalysis. Illicit addresses received a staggering $14 billion in 2022, nearly double the amount recorded in 2020.
Ajay Bhalla, President of Cyber and Intelligence Solutions for Mastercard, emphasized the rising risks associated with the digitalization of finance. Bhalla revealed, “Our latest data shows fraud on transactions where people are buying crypto is 5 times higher than regular fiat transactions.” The partnership with Feedzai aligns with Mastercard’s broader strategy, building on its 2021 acquisition of CipherTrace and the subsequent launch of CryptoSecure in 2022 to analyze and block transactions from high-risk crypto exchanges.
As Mastercard takes proactive steps to secure its vast global network used by banking institutions, the partnership with Feedzai underscores a commitment to making cryptocurrency a safer and more regulated space, bridging the gap between traditional financial systems and emerging digital assets.
