Category: AML & CFT

Dive into the intricate and compelling world of Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) with Signzy’s extensive and comprehensive collection of insightful articles.

Our team of expert contributors offers an in-depth exploration into the most recent trends, pioneering solutions, and significant regulatory changes that are directly impacting the landscape of AML/CFT.

Navigating the complex maze of the rapidly evolving fintech industry requires a strong grasp of new technologies and innovative methodologies that are shaping the future of AML/CFT. Our articles cover a broad spectrum of engaging topics, from the critical role of artificial intelligence in detecting and identifying suspicious activities to the wide-ranging effects of new regulations on financial institutions operating on a global scale.

At Signzy, we are committed to the belief that sharing knowledge is not just beneficial, but vital in the ever-evolving world of fintech. We strive to create a resourceful platform that enlightens and informs our readers about the significant aspects of AML/CFT. Our ultimate goal is to provide a well-rounded view of the multifaceted challenges and numerous opportunities that are presented by AML/CFT, and how these can be effectively navigated within the dynamic and fast-paced world of fintech.

Whether you’re a seasoned financial professional aiming to stay at the forefront of the industry, a student brimming with eagerness to learn about the fascinating intersection of technology and finance, or simply an interested individual captivated by the transformative world of fintech, our articles offer a wealth of valuable insights and in-depth analyses into AML/CFT.

Join us in our explorative journey into the future and Stay well-informed about the latest regulatory changes and technological innovations that are fundamentally reshaping the financial world. With Signzy, you’re not just reading about the future of fintech – you’re part of it.

Transaction Monitoring

What is Transaction Monitoring in AML?

Posted on | by Signzian

Transaction Monitoring in Anti-Money Laundering (AML) is a pivotal tool in the fight against financial crime. It involves scrutinizing financial transactions to detect suspicious activities indicative of money laundering. This process not only helps in identifying potential risks but also ensures compliance with increasingly stringent regulatory standards. Understanding its mechanisms and applications is crucial for maintaining the integrity of financial systems.

In today’s global financial landscape, the battle against financial crimes, particularly money laundering, is a top priority for governments, regulatory bodies, and financial institutions. According to the United Nations Office on Drugs and Crime (UNODC), the estimated amount of money laundered globally in one year is 2-5% of global GDP, which translates to $800 billion – $2 trillion. This statistic underscores the cruciality of Anti-Money Laundering (AML) measures. 

The Critical Role of Transaction Monitoring in AML

It is a fundamental component of AML efforts that aims to identify and investigate unusual or suspicious financial activities. Its primary role is to track financial transactions in real-time or retrospectively, analyze patterns, and flag potential red flags that could indicate money laundering, terrorist financing, or other illicit activities. Transaction monitoring acts as the eyes and ears of AML compliance programs, helping to maintain the integrity of the financial system.

Mechanisms of Transaction Monitoring

It relies on sophisticated algorithms and technology-driven processes to scrutinize vast amounts of financial data. Here’s how it works:

Data Collection: Transaction monitoring starts with the collection of transaction data from various sources, including banks, financial institutions, and other relevant entities. This data encompasses a wide range of financial activities, from wire transfers and cash deposits to credit card transactions.

Pattern Recognition: Advanced software is employed to analyze the collected data. These systems utilize predefined rules and algorithms to detect patterns that deviate from the norm. These patterns can include unusually large transactions, frequent international transfers, or transactions involving high-risk jurisdictions.

Alert Generation: When the monitoring system identifies a transaction that matches predefined suspicious patterns or criteria, it generates an alert. These alerts are sent to compliance officers for further investigation.

Investigation and Reporting: Compliance officers review the alerts generated by the system. They conduct in-depth investigations to determine whether the flagged transactions are indeed suspicious or potentially indicative of money laundering or other financial crimes. If warranted, they escalate the case for further action, including reporting to regulatory authorities.

Challenges in Transaction Monitoring:

While it is a powerful tool in the fight against money laundering, it is not without its challenges:

  • The sheer volume of financial transactions can be overwhelming. Monitoring systems must process and analyze massive datasets, which can be a resource-intensive task.
  • Transaction monitoring systems often generate false positives, flagging legitimate transactions as suspicious. This can lead to increased workload for compliance officers and potential delays in processing legitimate transactions.
  • Criminals are constantly evolving their money laundering tactics. They employ increasingly sophisticated methods to evade detection, making it challenging for transaction monitoring systems to keep up.
  • AML regulations are subject to change and vary from one jurisdiction to another. Compliance with these evolving regulations adds complexity to transaction monitoring.

Importance in Preventing Financial Crimes

Transaction monitoring plays a crucial role in preventing financial crimes, and its importance cannot be overstated:

  • Transaction monitoring helps detect unusual or suspicious activities that may be indicative of money laundering, terrorist financing, or other financial crimes. 
  • The knowledge that transactions are being actively monitored acts as a deterrent to would-be money launderers and criminals. The risk of being caught discourages illicit financial activities.
  • Financial institutions are legally obligated to comply with AML regulations. Effective transaction monitoring helps institutions fulfill their compliance obligations. This reduces the risk of regulatory penalties and reputational damage.
  • The Financial Action Task Force (FATF) states that transaction monitoring is a key component of a robust AML/CFT (Countering the Financing of Terrorism) regime and emphasizes its importance in mitigating financial crime risks.

Conclusion

Transaction monitoring is the vigilant guardian of the financial system. Its sophisticated mechanisms, fueled by advanced technology and intelligent algorithms, play a crucial role in identifying and preventing financial crimes like money laundering, terrorist financing, and fraud.

As statistics show, the global financial system is vulnerable to these crimes, with money laundering alone estimated to reach a staggering $1.6 trillion annually. This alarming trend underscores the critical need for robust transaction monitoring systems.

Signzy’s Data Breach API serves as a powerful shield in this fight. This innovative tool provides real-time insights into data breaches, enabling financial institutions to verify the integrity of customer information and identify potential threats. By integrating the Data Breach API into their transaction monitoring systems, institutions can identify compromised credentials, prevent fraudulent transactions, and enhance compliance. Protecting sensitive data is paramount in today’s digital landscape, and Signzy’s Data Breach API is your ally in this endeavor. 

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

AML

AML and Counter-Terrorist Financing

Posted on | by Signzian

The financial system, a vital artery of the global economy, faces a critical vulnerability – the infiltration of illicit funds. Money laundering, the process of disguising the origins of criminally acquired proceeds, and its sinister cousin, terrorist financing, pose serious threats to national security, financial stability, and public trust. To stand guard against these shadows, a robust framework of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) controls has been erected by regulators and embraced by responsible financial institutions, including banks.

Understanding the Threat Landscape

Money laundering involves disguising the origin and ownership of illegally obtained funds. Criminals employ sophisticated techniques like structuring, layering, and placement to integrate dirty money into the legitimate financial system. These funds then fuel criminal enterprises, ranging from drug trafficking to human trafficking, eroding public trust and undermining the rule of law.

Terrorist financing, on the other hand, involves raising and moving funds to support terrorist activities. This can include financing operational logistics, propaganda, recruitment, and even attacks. Terrorist groups exploit legitimate financial channels, such as charities or money service businesses, making detection and disruption crucial to preventing violence and instability.

The Framework of Defense: International Standards and Regulatory Landscape

Combatting these threats requires a multi-pronged approach, with the Financial Action Task Force (FATF) playing a central role. The FATF sets global AML/CFT standards through its 40 Recommendations, encompassing customer due diligence, suspicious activity reporting, and international cooperation. These recommendations are then translated into national laws and regulations by individual countries.

Implementing these international standards takes shape for banks through comprehensive AML/CFT programs. These programs encompass a range of controls, including:

Customer Due Diligence (CDD): This involves verifying the identity and legitimacy of customers, understanding their business activities and expected transaction patterns, and monitoring their accounts for suspicious activity. Enhanced CDD may be required for high-risk customers, such as those from politically exposed countries or with opaque business models.

Know Your Customer (KYC): KYC is a core component of CDD, focusing on understanding the customer’s identity, purpose, and risk profile. This helps banks identify and mitigate potential risks associated with money laundering or terrorist financing.

Suspicious Activity Reporting (SAR): Banks are obligated to report transactions that appear suspicious or inconsistent with a customer’s profile. This allows law enforcement to investigate and potentially identify illicit activity.

Transaction Monitoring: Banks employ sophisticated technology and analytical tools to monitor customer transactions for patterns indicative of money laundering or terrorist financing. These tools can flag suspicious activity for further investigation by compliance personnel.

Sanctions Compliance: Banks must comply with sanctions imposed by international organizations and national governments against individuals and entities involved in terrorism, drug trafficking, and other illegal activities.

Challenges and Continuous Improvement

Effectively implementing these controls is an ongoing challenge for banks. The evolving nature of criminal and terrorist tactics requires constant adaptation and innovation. Technology can be a powerful tool, but it also presents opportunities for exploitation by criminals. Additionally, international cooperation and information sharing are crucial for effectively tracking and disrupting illicit financial flows.

Despite the challenges, banks play a crucial role in safeguarding the integrity of the financial system and protecting society from the harmful effects of money laundering and terrorist financing. By continuously strengthening their AML/CFT frameworks, banks can contribute to a safer and more secure world.

Conclusion

The battle against financial crime demands constant vigilance and adaptability. While traditional AML/CFT frameworks provide a solid foundation, the ever-evolving criminal scape needs something more effective. This is where Signzy’s Data Breach API emerges as a game-changer. The API offers a powerful tool to help banks enhance their AML and CTF efforts. By leveraging this API, banks can access real-time data breach information. This enables them to identify potential vulnerabilities and strengthen their security measures.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

Digital Payment Fraud Combat

Digital Payment Fraud Combat

Posted on | by Signzian

As the threat of financial fraud is increasing day by day, regulators are worried about how to tackle this. The Department of Financial Services (DFS), Ministry of Finance, recently spearheaded a crucial meeting in New Delhi. Attended by key stakeholders from diverse sectors, the gathering aimed to address the mounting concerns surrounding cyber security in the financial landscape.

Tackling Digital Payment Frauds: A Unified Approach

The meeting focused on the escalating trend of digital payment frauds, underscoring the imperative for a cohesive strategy to protect citizens’ financial well-being. A pivotal achievement emerged as 70 lakh mobile connections linked to cybercrimes and financial frauds were disconnected through digital intelligence platforms, safeguarding 3.5 lakh victims from potential losses totaling Rs. 900 crore.

Key Takeaways:

  1. Strengthened Coordination: Emphasis was placed on seamless collaboration between law enforcement agencies, banks, and financial entities to swiftly track and block fraudulent transactions.
  2. Expanded CFCFRMS Platform: A call was made to bring all financial institutions under the ‘Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS)’ platform, with 259 already onboarded.
  3. Combating Mule Accounts: Banks were urged to devise effective strategies to combat the use of mule accounts for laundering illicit funds.
  4. Enhanced Response Time: Banks were instructed to improve their response time in handling alerts on online financial frauds from various agencies.
  5. Nodal Officers for Law Enforcement: The recommendation was made for banks and financial institutions to appoint regional/state-level nodal officers to facilitate smooth coordination with law enforcement agencies.
  6. Centralized Merchant Registry: The establishment of a centralized registry for onboarding merchants and standardization of KYC procedures was emphasized.
  7. Whitelisting Digital Lending Apps: A consultative approach was advocated to whitelist digital lending apps, ensuring adherence to regulatory guidelines.
  8. Digital Lending Working Group Recommendations: Progress on implementing the Digital Lending Working Group’s recommendations, including the establishment of DIGITA and the ‘Banning of Unregulated Lending Activities (BULA) Act,’ was reviewed.
  9. Customer Awareness and Sensitization: Stakeholders were urged to undertake comprehensive customer awareness and sensitization programs to promote digital payment security.

Insights from Stakeholders

Insightful analyses were presented by the Indian Cyber Crime Co-ordination Center (I4C), Ministry of Home Affairs, utilizing data from the National Cyber Crime Reporting Portal (NCRP). The State Bank of India (SBI) shared experiences with the Proactive Risk Monitoring (PRM) strategy, highlighting its effectiveness. PayTM and Razorpay representatives contributed best practices, showcasing their strategies for preventing and detecting online financial frauds.

Signzy’s Role in Combating Digital Payment Fraud

In a world where the financial landscape is continually evolving, staying ahead of potential fraud risks has never been more critical. Financial institutions, UPI companies, e-commerce giants, and card issuers all grapple with the challenge of identifying and mitigating fraudulent transactions while adhering to strict compliance regulations. Enter Signzy, a pioneering company that has revolutionized the way we approach fraud risk management with its innovative and compliance-focused product.

Real-time Fraud Detection and Prevention

Signzy’s robust solution is engineered to monitor transactions in real-time, supporting all modes of transactions, including debit card transactions, credit card purchases, net banking, AML, UPI payments, wallet transactions, POS/PG transactions, AEPS transactions, and more. This real-time monitoring ensures that fraudulent transactions are promptly addressed, mitigating the financial losses and reputational damage that can result from delayed fraud detection.

Signzy’s Core Components:

Fraud Risk Management: This forms the backbone of the system, identifying and flagging potential fraudulent transactions through advanced algorithms and real-time data analysis.

Rule Engine: Signzy’s rule engine is highly adaptable, allowing clients to add new rules or modify existing ones according to their specific requirements. This flexibility empowers organizations to stay agile in the ever-changing landscape of financial fraud.

Negative Due Diligence: This component is crucial for conducting thorough background checks on transactions and customers, further enhancing the accuracy of fraud detection.

Chargeback Tool: Signzy’s chargeback tool streamlines the process of managing chargebacks, making it quicker and more efficient.

Periodic Monitoring: Monitoring Business Entities, individuals, merchants (both offline and online) proactively by ensuring they are continuously watched to avoid potential fraud losses post onboarding.

Seamless Integration:

One of the standout features of Signzy’s product is its ease of integration. Companies like UPI giants PhonePe, Paytm, and GPay, banks, e-commerce titans like Flipkart, Myntra, Amazon, and Nykaa, as well as card issuers such as VISA and Mastercard can all integrate Signzy’s solution using a single API within just 48 hours. In contrast, traditional methods often take around six months for banks to implement.

Moreover, Signzy’s platform allows for data feeding in simple formats, making it adaptable to the unique needs of each organization. It’s a no-code platform, which means that clients have the autonomy to blacklist or whitelist specific transactions. If there’s a noticeable trend of fraudulent transactions originating from the same location or IP address, the system can swiftly block that entire location and source, providing an extra layer of security.

AML-Sanction Screening:

Signzy’s solution doesn’t stop at fraud prevention. It also incorporates Anti-Money Laundering (AML) and sanction screening processes, ensuring compliance with international financial safety standards.

Time and Cost Savings:

The benefits of Signzy’s product are substantial. While traditional compliance management often takes banks 10-12 months to implement, Signzy’s solution reduces this time frame to just two weeks. Smaller companies can integrate it in as little as 3-4 days, giving them an edge in rapidly changing markets.

Signzy’s product is PCI-DSS compliant, which is essential for maintaining the highest safety standards. This compliance also allows for immediate rule additions and modifications, ensuring that your organization is always up to date with the latest security measures. The product also includes a case management tool, enabling organizations to act and respond swiftly to any security incidents, further reducing the potential damage of fraud.

Enhanced Customer Confidence:

In addition to the substantial time and cost savings, Signzy’s product also enhances customer confidence. With the ability to swiftly identify and address fraudulent activities, customers can trust that their financial transactions are secure. The real-time monitoring and instant response to potential fraud provide peace of mind, resulting in higher customer satisfaction and retention. This boost in confidence can also lead to increased transaction volumes and customer loyalty, giving businesses a competitive edge in the market.

Unparalleled Flexibility:

Signzy’s solution is designed to evolve with your business. Its adaptable rule engine enables clients to not only add or modify rules but also tailor the system to meet the unique needs of their industry. This flexibility is invaluable in today’s fast-paced financial world, where new fraud tactics and trends emerge regularly. Whether it’s a UPI company, a bank, an e-commerce giant, or a card issuer, Signzy’s product empowers them to stay one step ahead of fraudsters without the constraints of rigid systems.

With the help of Signzy’s cutting-edge technology, businesses can keep one step ahead of fraudsters in the never-ending game of cat and mouse. The real-time monitoring tool quickly detects and flags any suspicious trends or abnormalities by keeping a close watch on transactions. Its flexible rules framework ensures that the system changes and fortifies its defenses over time by enabling a dynamic reaction to new threats. Additionally, the quick integration capabilities allow clients to be onboarded with ease and minimise operational interruptions. Clients and end users may feel secure knowing that every transaction complies with the strictest industry standards and legal requirements thanks to the extensive compliance capabilities.To put it simply, Signzy’s ground-breaking solution is evidence of the company’s dedication to pushing the boundaries of financial security and dependability in a time when technical advancement and trust are critical.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs, easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.
Contact us directly!

RBI Rules for Wire Transfer

RBI Updates Wire Transfer Rules to Combat Money Laundering

Posted on | by Signzian

The Reserve Bank of India (RBI) has updated its wire transfer rules in an effort to combat money laundering. The new rules, which came into effect on May 10, 2023, require banks and other financial institutions to collect more information about wire transfer senders and recipients.

The new rules also require banks to report all wire transfers of more than $50,000 to the Financial Intelligence Unit of India (FIU-IND). The FIU-IND is India’s central agency for receiving, processing, analyzing, and disseminating information relating to suspected or actual instances of money laundering or terrorist financing.

The RBI’s decision to update its wire transfer rules is part of a broader effort to combat money laundering and terrorist financing. Under the new rules, banks and other financial institutions must collect the following information for all wire transfers:

  1. The name of the sender and recipient
  2. The sender’s and recipient’s account numbers
  3. The reason for the wire transfer
  4. The source of the funds being transferred

Banks and other financial institutions are also required to verify the identity of the sender and recipient of each wire transfer. This can be done by requiring the sender and recipient to provide government-issued identification documents.

The RBI has said that the new rules are necessary to “strengthen the fight against money laundering and terrorist financing.” The RBI has also said that the new rules will not have a significant impact on the cost of wire transfers for businesses and individuals.

What does New Wire Transfer Rules mean for businesses and individuals?

The new wire transfer rules by RBI mean that businesses and individuals will need to provide more information when sending or receiving wire transfers. This information will include the name, address, and account number of the sender and recipient. The new rules also require businesses and individuals to provide a reason for the wire transfer.

The new rules are designed to prevent money laundering and terrorist financing. By requiring businesses and individuals to provide more information, RBI can better track and monitor wire transfers. This will help to identify and stop suspicious transactions.

It will have a number of implications for businesses and individuals. Businesses will need to update their systems and procedures to comply with the new rules. This may involve investing in new software and training staff. Individuals may also experience some inconvenience as they will need to provide more information when sending or receiving wire transfers.

However, the new rules are important for protecting the financial system from money laundering and terrorist financing. By complying with the rules, businesses and individuals can help to keep their money safe and help to make the financial system more secure.

Here are some of the key implications of the new wire transfer rules for businesses and individuals:

  • Businesses will need to update their systems and procedures to comply with the new rules.
  • Individuals may experience some inconvenience as they will need to provide more information when sending or receiving wire transfers.
  • They are designed to prevent money laundering and terrorist financing.
  • By complying with the rules, businesses and individuals can help to keep their money safe and help to make the financial system more secure.

What can businesses and individuals do to comply with the new rules?

Businesses and individuals can comply with the new RBI wire transfer rules by:

  1. Gathering the required information about the sender and recipient of each wire transfer.
  2. Verifying the identity of the sender and recipient of each wire transfer.
  3. Using a bank or other financial institution that is familiar with the new RBI wire transfer rules.

By taking these steps, businesses and individuals can help to ensure that they are complying with the new RBI wire transfer rules and that they are not inadvertently aiding in money laundering or terrorist financing.

Implications of the Wire Transfer Rules

The RBI’s updated wire transfer rules are a step in the right direction, however, they are just one part of the solution. India needs to do more to combat money laundering and terrorist financing, including strengthening its anti-money laundering and terrorist financing laws, improving its enforcement of these laws, and increasing public awareness of the risks of money laundering and terrorist financing.

Here are some of the implications of the new rules:

  1. Increased compliance costs for banks and other financial institutions: The new rules will require banks and other financial institutions to collect more information about wire transfer senders and recipients, and to report all wire transfers of more than Rs.50,000 to the FIU-IND. This will increase the compliance costs for these institutions.
  2. Reduced anonymity for wire transfer senders and recipients: The information required about wire transfer senders & recipients will reduce the anonymity of these individuals, which could make it more difficult for them to launder money or finance terrorism.
  3. Improved detection of money laundering and terrorist financing: The new rules will require banks and other financial institutions to report all wire transfers of more than Rs.50,000 to the FIU-IND. This will help the FIU-IND to identify and investigate potential cases of money laundering and terrorist financing.

How can Signzy help in the KYC of Wire Transfers? 

One of the ways that Signzy can help with wire transfer compliance is by automating the process of collecting and verifying customer information at a reasonable cost. Our solution also helps to reduce the risk of human error and ensure that all required information is collected efficiently. The solution is best to comply with wire transfer regulations and reduce the risk of money laundering and terrorist financing.

Here are some of the specific ways that Signzy can help with compliance:

  • Customer onboarding: Signzy can help financial institutions to onboard new customers quickly and easily. Our platform automates the process of collecting and verifying customer information. This can help to reduce the risk of human error. We have ready-to-use flows to quickly verify KYC and comply with applicable laws.
  • Transaction monitoring: Our platform uses artificial intelligence and machine learning to identify and flag suspicious transactions. Further it helps to prevent money laundering and terrorist financing.
  • Reporting: The platform can generate reports on customer activity, transaction monitoring, and other compliance-related data.

Our Take

Overall, the RBI’s updated wire transfer rules are a positive step in the fight against money laundering and terrorist financing. But this is not it. It is important to note that these rules are just one part of the solution. India needs to do more to combat these crimes, including strengthening its anti-money laundering and terrorist financing laws, improving its enforcement of these laws, and increasing public awareness of the risks of money laundering and terrorist financing.

Identity verification services — fueling the demand for safe gaming experience

How Online Gaming is becoming a soft target for Fraudsters

Posted on | by Signzian

We’ve all heard stories about fraudsters taking advantage of unsuspecting people through online gaming. However, what may surprise you is how often this happens and the extent of the damage it can cause. As more and more people turn to online gaming as entertainment, fraudsters also recognize this opportunity and are preying on its increasing popularity.

The proportion of New Paying Users (NPUs) in online gaming in India has grown at the fastest rate in the world, from 40% in 2020 to 50% in 2021. The number of paying players grew by 17% from 80 million in 2020 to 95 million in 2021, according to a report by EY FICCI (Federation of Indian Chambers of Commerce and Industry).

This blog post will discuss how online gaming is becoming a soft target for fraudsters and what measures can be taken to protect yourself against their malicious tactics. 

The rise in online gaming

In recent years, online gaming has become a popular pastime for people of all ages. But as the popularity of online gaming grows, so does the risk of fraud.

Fraudsters are increasingly targeting online gamers to steal their personal and financial information. They do this by setting up fake websites and game servers that trick gamers into giving up their login details or credit card information.

Some fraudsters also create fake game accounts and then use them to cheat other players out of their virtual possessions. Others may hack into legitimate game accounts and steal virtual currency or items.

Moreover, certain online gaming firms facilitate the trading of computer game items with traditional currencies like dollars, yuan, and pounds. This is called microtransactions and is seen in free-to-play games that give the option for digital purchases. Take, for example, Entropia Universe and Second Life offering purchasable products via their e-stores. More games have now started to entice gamers to make microtransactions by marketing loot boxes which are a selection of random in-game assets concealed until payment is made.

In another incident, it was reported on 31st January 2023 that there have been eight arrests in Noida for allegedly defrauding people with online gambling and betting apps. A total of Rs. 24 crores was frozen in various bank accounts, along with 193 mobile phones, 21 laptops, 416 checkbooks, 233 debit cards, and 21 point-of-sale devices.

The vulnerability seen in online gaming

According to a report by Kaspersky Lab, online gamers are increasingly becoming victims of fraud. The report found that in the first half of 2017, there was a 50% increase in the number of people who had their gaming accounts hacked compared to the same period in 2016.

There are several reasons why online gamers are particularly vulnerable to fraud. Firstly, many gamers use their real names and personal information when signing up for gaming platforms and services. This makes it easy for fraudsters to obtain this information and use it to commit identity theft or other types of fraud.

Secondly, gamers often make in-game purchases using credit cards or other payment methods. If a fraudster gains access to a gamer’s account, they can use this information to make unauthorized purchases.

Finally, gaming platforms and services are often targeted by phishing attacks. In a phishing attack, the attacker will send an email or message that appears to be from a legitimate gaming company or service. The message will usually contain a link that leads to a fake website designed to look like the real thing. Once on the fake website, the victim is asked to enter their login details or financial information. The attacker then uses this information to commit fraud.

To protect themselves from these attacks, gamers should only sign up for gaming platforms and services using secure passwords and payment methods. They should also be wary of any emails or messages that contain links, even if they appear to

The types of fraud in online gaming

The online gaming industry is becoming a soft target for fraudsters due to the amount of money and personal information exchanged daily. There are many different types of fraud being committed against online gamers, including:

  1. Credit card fraud: It is when someone uses another person’s credit card information to make unauthorized purchases in their name.
  2. Identity theft: This is when someone steals another person’s personal information (such as their name, address, date of birth, etc.) to open new accounts or make fraudulent charges in their name.
  3. Phishing is when someone contacts an individual via email, text message, or social media pretending to be from a legitimate company to get them to provide personal information or financial account details.
  4. Hacking is when someone gains unauthorized access to another person’s computer or gaming account to steal personal information or virtual goods/currency.

Final Thoughts

As online gaming continues to grow, it has become an increasingly attractive target for criminals looking to exploit players’ lack of knowledge and safety protocols. By understanding the risks associated with gaming and taking preventive steps like verifying the legitimacy of game providers, regularly changing passwords, avoiding public Wi-Fi networks, and installing updated anti-virus software on all devices used for gaming activities, gamers can greatly reduce their chances of becoming victims of fraudsters. With a little effort at prevention, gamers can enjoy their favorite activities without fear or worry.

Ensuring the digital gaming industry is secure from fraud is paramount for players. Not only does criminal activity damage a business’s reputation, but it can also greatly hurt its annual revenue. However, Artificial Intelligence (AI) can greatly help in this situation by being integrated into identity verification and AML screening systems. AI-powered solutions analyze a gamer’s behavior, flagging possible cheaters and stopping bad actors from making artificial accounts for illegal purposes. This ultimately means that comprehensive identity verification methods are the best way to prevent cheating.

At Signzy, we provide state-of-the-art quality AI-driven API products without needing a single line of code. The system is powered by thousands of AI algorithms that can render a good percentage of accuracy and real-time verification results in less than a second. 

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com.

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