Combating Crypto Crime: A Guide to Fraud Monitoring

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Where there’s an opportunity, fraudsters are sure to follow. With their potential for big profits and anonymity, cryptocurrencies are no exception. Not to mention, they’ve become so mainstream that over 15,000 businesses worldwide now accept them as a means of payment.  

As a business owner, you can’t just sit still in the face of these trends. You need an efficient technique to combat crypto crime and protect both your business and customers. 

And today, we put the accent on fraud monitoring. 

All about fraud monitoring and its components

Fraud monitoring systems are always on alert. Unlike fraud transaction monitoring, which is designed only to pay attention to fraudulent transactions, fraud monitoring is everywhere. It monitors transactions, observes user behavior, analyzes IP addresses, etc.

In addition to fraud, many businesses also leverage AML (Anti-Money Laundering) screening software as part of their overall monitoring strategy. This software helps to identify suspicious activity that could be linked to money laundering or other financial crimes. AML platforms like Seon typically check customer information against government databases of sanctions lists and politically exposed persons (PEPs). It can also monitor for unusual transaction patterns that might be indicative of money laundering.

Even if you’re the most hardworking person ever, you can’t be on watch day and night. The same goes for your employees. This is basically the main idea behind fraud monitoring – to spot signs of fraud that you might otherwise fail to notice until it’s too late to do something about it. 

And trust me – nothing good comes from ignoring potential fraud. So that you don’t make the same mistakes as many, it’s time to get yourself familiar with fraud monitoring. Let’s first explain what it does best so that we can later paint a better picture of its importance in cryptocurrency. 

Real-time monitoring

Fraud monitoring can also be done manually, but it’s far easier to do it automatically. Fraud monitoring systems are designed to monitor and analyze potential fraud signs as they occur. They do this so that you won’t have to deal with the consequences of overlooking them but rather cut fraudsters off at the source. Stopping the disease before it spreads. 

Let me give you an example of what could happen if fraud isn’t timely prevented. In 2014, a crypto exchange, Mt. Gox, lost 850,000 Bitcoins, affecting both creditors and traders and resulting in the company’s collapse. A decade later, they started repaying Bitcoins to creditors.

Not to worry. Monitoring fraud in real time doesn’t mean that these systems immediately block all transactions coming your way. In fact, you can customize them as to when they’re allowed to block a transaction or wait for you to review less risky alerts manually before doing so. 

For example:

• If a user attempts to make a cryptocurrency transaction with a larger than usual amount, the fraud monitoring system might automatically flag it as high-risk and block it. 

• If a user attempts to log in a few times from different devices, it doesn’t necessarily mean a bad thing, in which case, the system might wait for you to review it manually. 

Real-time monitoring is always in handy, but especially for cryptocurrencies. This is because transactions confirmed on the blockchain are usually irreversible. Now, combine that with the challenge of tracing these transactions due to their pseudonymous nature, and you get the drift.

Monitoring user behavior

But fraud monitoring systems don’t just look at financial activities. They also keep an eye on how users behave. Let’s go over the techniques and steps that enable them to do so:

• Collecting data: Fraud monitoring systems first collect all kinds of data, including login data, transaction data, browsing data, or device data. This is how they get to know more about the user regarding how they interact with your business. All this data collected helps them create a pattern, that is, a typical behavior profile for each user. 

• Analyzing data: Once they have enough information to work with, fraud monitoring systems continue analyzing this data. If they notice a change in a user’s behavior, that is, a deviation from the pattern, such as unusual login times or unusual login locations, they might suspect something fraudulent is going on and send you a rule-based alert.

Fraud monitoring systems start collecting data as soon as a user tries to sign up. They won’t let anyone slip by without verifying their identity by asking them to provide personal information and an ID to verify these claims, confirm their email or number, and analyze their ID address. 

Why fraud monitoring is important in cryptocurrencies

One thing you can be 100% sure about is that you never want to wait until the damage is done. Not only can you face substantial losses and legal implications, but falling victim to crypto fraud might also tarnish your reputation. It’s quite a big blow, even for already established businesses. 

This is why you have fraud monitoring on your side to:

Protect you against crypto crime

We often hear about how secure blockchain is, but unfortunately, it’s not enough to keep fraudsters away. In fact, cryptocurrency fraud is now considered to be the riskiest scam for customers, with around 80% of Americans targeted in crypto scams having lost money. 

The question is, why are cryptocurrencies so attractive to fraudsters?

The first reason is that they allow you to conduct transactions anonymously. This makes it harder or almost impossible to track the fraudster. Also, once you make a transaction, it’s incredibly difficult to recover your funds. And most importantly – cryptocurrencies allow fraudsters to operate globally, meaning the opportunities are practically endless:

• Unauthorized access and account takeover: Judging by the name, you can already guess what we’re referring to here. It’s a situation where fraudsters gain access to your or your users’ accounts without having permission to do so. 

• Phishing attacks: This is one of the most common methods fraudsters use to trick you into revealing sensitive information, such as login or card details. And before you think, “There’s no way I’m falling for that,” keep in mind that fraudsters are experienced in mimicking legitimate emails, so you can easily assume it’s your bank asking for details. 

• Ransomware attack: If a phishing attack turns out to be successful, prepare to fight a ransomware attack. Simply put, once fraudsters have access to your computer system, they’ll block it unless you pay them a sum of money, that is, ransom. 

And the worst thing about all this is that it isn’t anywhere near the full extent of crypto crimes fraudsters have been committing. It’s hard to keep up, so you can see how a fraud monitoring system can make a huge difference for businesses and individuals combating crypto crime. 

Help you gain and retain customer trust

Gaining customers’ trust when you’re operating is harder than ever. Which I’m sure you already know. This is because crypto has been associated with many crimes over the years. 

So, if you’re a modern business that already has or is planning on adopting cryptocurrencies as a form of payment, then you MUST protect your customers at all costs. Your reputation depends on it. Once customers lose trust, you’ll find it hard to regain it. And trust me, falling victim to fraud and potentially losing money is a recipe for losing trust in a business. 

By implementing fraud monitoring measures, you can present your business as trustworthy right from the start. But even if push came to shove, you and your customers wouldn’t be facing any serious consequences due to the fraud management system preventing the crime on time. 

You can then be sure that your customers are here to stay. 

Adhere to fraud monitoring regulations 

When you’re operating in the crypto space, you must adhere to specific regulations for fraud prevention. Implementing a fraud monitoring system can help you a great deal with this. 

How?

By simply doing what it does best – monitoring transactions and potentially preventing fraudulent activities before they even happen. Regulations for fraud prevention depend on the country, but the beauty of advanced fraud monitoring systems is that they can stay up to date with changing regulations, which undoubtedly is a struggle in the cryptocurrency space. 

Staying safe in the world of cryptocurrency

Cryptocurrency platforms like Gemini or Coinbase have come a long way since they first appeared in 2008. But, the potential for making profits overnight while staying anonymous has brought many crypto crimes to combat.

And you can do this successfully just by implementing fraud monitoring systems to take care of all the monitoring for you – 24/7. These systems don’t focus directly on the crime but rather on analyzing what could potentially signal fraud. That would be user information and behavior. 

Whether you’re struggling to get your customers to trust you, staying up to date, and adhering to changing regulations, or you’re simply cautious by nature, fraud monitoring is here to help. 

Bio

Makedonka Micajkova is a freelance content writer and translator, always bringing creativity and originality to the table. Being multilingual with professional proficiency in English, German, and Spanish, it’s needless to say that languages are her biggest passion in life. She is also a skilled communicator, as a result of having three years of experience as a sales representative. You can find her on Linkedin.

Disclaimer: This is a paid post and should not be treated as news/advice. LiveBitcoinNews is not responsible for any loss or damage resulting from the content, products, or services referenced in this press release.