Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Digital Identity, Privacy, KYC, AML/ATF
Safeguarding Your Digital Identity: A Guide to Personal Data Privacy
Oct 20, 2024
In today's digital age, our personal information is constantly being collected, shared, and analyzed. From social media posts to online shopping habits, our digital footprints are everywhere. This makes protecting our personal data more important than ever. But what exactly is personal data, and why should we care about its privacy? This article will explore these questions and provide practical steps to help you safeguard your digital identity.
Why is Data Privacy Important?
You might be wondering, "Why should I care about data privacy?" The answer is simple: your personal data is valuable, and its misuse can have serious consequences. Here's why data privacy matters:
Identity Theft
With enough personal information, criminals can impersonate you, opening credit cards or taking out loans in your name. This can wreak havoc on your financial life and take years to resolve.
Financial Loss
Beyond identity theft, your financial information could be used for fraudulent transactions or to gain access to your accounts.
Reputation Damage
Personal information, especially when taken out of context, could be used to harm your reputation, affecting your personal and professional life.
Discrimination
Your data could be used to discriminate against you in various ways, from job applications to insurance rates.
Manipulation
With detailed knowledge about your preferences and behaviors, entities could potentially manipulate your decisions, from what you buy to how you vote.
Loss of Control
Once your data is out there, it's hard to control who has access to it and how it's used. This loss of control over your personal information can be unsettling and potentially harmful.
The Evolving Landscape of Data Privacy
The digital world is constantly evolving, and so are the threats to our data privacy. Here are some of the key factors shaping the current data privacy landscape:
Big Data
Companies are collecting and analyzing massive amounts of data to gain insights into consumer behavior. While this can lead to improved products and services, it also raises concerns about privacy and data misuse.
The Internet of Things (IoT)
Smart devices, from home assistants to fitness trackers, are collecting data about our daily lives. This interconnected network of devices creates new privacy challenges.
Artificial Intelligence (AI)
AI and machine learning algorithms can analyze data in ways that weren't possible before, potentially uncovering sensitive information or making predictions about individuals.
Data Breaches
High-profile data breaches have become increasingly common, exposing millions of people's personal information to potential misuse.
Surveillance
Both government and corporate surveillance have increased, raising questions about the balance between security and privacy.
Key Principles of Data Privacy
Several fundamental principles underpin the concept of data privacy. Understanding these principles is crucial for navigating the complexities of data protection:
1. Transparency: Organizations should be clear about what data they're collecting and how they're using it.
2. Purpose Limitation: Data should only be collected for specified, explicit, and legitimate purposes.
3. Data Minimization: Only the minimum amount of data necessary for the stated purpose should be collected.
4. Accuracy: Personal data should be kept accurate and up to date.
5. Storage Limitations: Data should not be kept for longer than necessary.
6. Integrity and Confidentiality: Appropriate security measures should be in place to protect personal data.
7. Accountability: Organizations should be responsible for complying with these principles and able to demonstrate their compliance.
These principles form the basis of many data protection regulations worldwide and are crucial for maintaining privacy in the digital age.
Practical Steps to Protect Your Data
Now that we've covered the "why" and "how" of data privacy let's explore some practical steps you can take to protect your personal information:
1. Understand Your Rights: Familiarize yourself with the data protection laws in your region. Know what rights you have regarding your personal data.
2. Review Privacy Policies: Before using a service or app, take the time to read and understand its privacy policy. Look for information on what data is collected and how it's used.
3. Manage Your Online Presence:
Be mindful of what you share on social media
- Use privacy settings to control who can see your posts
- Regularly review and update these settings
4. Control Cookies and Tracking:
- Use browser extensions to block trackers
- Clear your cookies regularly
- Consider using a privacy-focused browser
5. Secure Your Devices:
- Use strong, unique passwords for all your accounts
- Enable two-factor authentication where possible
- Keep your software and operating systems up to date
6. Manage App Permissions: Regularly review the permissions you've granted to apps on your devices. Revoke unnecessary permissions.
7. Be Aware of Phishing Attempts:
- Be cautious of unsolicited emails or messages asking for personal information
- Verify the sender's identity before clicking on links or downloading attachments
8. Dispose of Data Securely: When getting rid of old devices, ensure all personal data is securely erased.
9. Exercise Your Data Rights: Use tools provided by companies to access, download, or delete your data.
10. Stay Informed: Keep up with news and developments in data privacy. Knowledge is power when it comes to protecting your personal information.
The Future of Data Privacy
The landscape of data privacy is constantly evolving. As technology advances, new challenges and opportunities arise. Here are some key trends to watch:
Increased Regulation
We can expect to see more comprehensive data protection laws being implemented around the world. These regulations will likely focus on giving individuals more control over their data and imposing stricter penalties for non-compliance.
Privacy-Enhancing Technologies (PETs)
New technologies are being developed to enhance privacy. For example, Privacy Engine explains the concept of "Privacy by Design," which involves building privacy protections into products and services from the ground up.
Decentralized Data Management
Blockchain and other decentralized technologies could revolutionize how personal data is stored and managed, potentially giving individuals more control over their information.
Artificial Intelligence and Privacy
As AI becomes more sophisticated, it will play a dual role in data privacy. On one hand, AI can be used to analyze and protect personal data more effectively. On the other hand, it also poses new privacy risks that will need to be addressed.
Ethical Considerations
There's growing recognition that data privacy is not just a legal issue, but an ethical one. We can expect to see more discussions about the ethical use of personal data in the coming years.
Conclusion
Protecting your personal data in the digital age is crucial, but it doesn't have to be overwhelming. By understanding what personal data is, why it's important, and taking practical steps to protect it, you can navigate the digital world with confidence.
Data privacy is not just about protecting yourself from harm. It's about maintaining control over your personal information and, by extension, your digital identity. As we move further into the digital age, this control will become increasingly important.
Stay informed, be proactive, and don't be afraid to advocate for your privacy rights. After all, in the information age, your data is one of your most valuable assets. Protect it wisely.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Essential Safety Tips for Protecting Your Privacy Online
Sep 4, 2024
With an increasingly connected world, protecting your privacy online is becoming one of the most essential elements of digital life. As we have shared more and more personal information through various platforms, the possibility of being exposed to data breaches and cyberattacks escalates accordingly.
Whether wandering on social media, shopping, or looking through an online casino, taking proactive measures to ensure your online safety can help avoid identity theft and other possible dangers. Here are some important safety tips for keeping your information safe.
Be Mindful of the Information You Share
Start protecting your online privacy by raising awareness regarding the type of personal information you are putting out there. This goes from your name and address to the more sensitive ones, like financial data. On social media, limit the amount of personal data you set to public views.
Whenever you play in an online casino like JackpotCity or visit other sites that ask for your private information, make sure they are reputable and safe. Look for SSL encryption, which you know by a padlock icon in the address bar and "https" in the URL. This ensures that all data transferred between you and the website is scrambled and inaccessible to any unauthorized party.
Practice Good Password Hygiene
Probably more important in terms of online privacy generally is password security. Long, unique passwords for every account prevent access by unauthorized users. Using a mix of letters, numbers, and special symbols and not personal information such as a name or common word can secure your passwords. Also, change them periodically, and track them using a password manager.
Two-factor authentication adds an extra layer of security with 2FA, which further requires a second form of verification apart from your password. For instance, it can be a code on your phone. Enabling 2FA on your accounts increases the security level significantly in case the password is compromised.
Stay Aware of Phishing Scams and Malicious Links
Phishing scams are numerous to rob personal information from someone. Most of them come from emails and messages that pose to be legitimate sources, mostly banks or famous websites, asking for sensitive details or even luring you to click a link. Always verify the authenticity of such communications by contacting the company directly through official channels.
Be cautious about the links you follow and from whence they are; they may come from an obscure source. A link to a harmful website may be able to phish your information or install malware on your device. Use a reliable type of antivirus and have its program updated to detect or block threats.
See: Cyber security world first as unique guide is launched
Other good practices include periodically reviewing your privacy settings for all online platforms. Social networking sites, online casinos, and pretty much any web service update their privacy policies and settings regularly. By staying informed, one can be in control of whom the information one has is available to.
Protecting Your Privacy Online
Keeping your privacy on the internet is a really vigilant and very active process: monitoring the information you volunteer, keeping good password hygiene, and being conscious of phishing scams and other harmful links. All these will go a very long way in preventing possible risks to your personal information. Staying informed and changing online behavior is crucial to maintaining privacy and security as the digital world progresses. Whether you're surfing the Web or playing games in an online casino, these critical safety tips will help you confidently face any situation that might arise in the digital world.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Microsoft to Launch Controversial Recall Feature
Data Privacy | Aug 26, 2024
Image: Freepik/rawpixel.com
Microsoft's new Windows Recall AI Faces Backlash Over Privacy Risks
Windows is launching Recall, a controversial AI feature to Windows Insiders this October 2024, that hopes to improve productivity by capturing the entire screen of a user's device in seconds-by-second screenshots including chat histories, web pages, files, and all user activities across multiple devices.
See: Good, Bad, and Ugly of Project Strawberry’s Capabilities
While the data is to be encrypted using BitLocker and stored locally so that it isn't uploaded accidentally or transferred anywhere online, critics argue that Recall infringes on privacy as it captures sensitive information such as passwords, bank account details and private chats which can fall into the wrong hands. What if malware penetrates your local machine, hackers could access/modify such screenshots or create new vulnerabilities resulting in a privacy nightmare.
Benefits
Among the handful of benefits, Recall is supposed to improve productivity as users can search for past content and work activity easier. Instead of manually hunting for past documents, they can simply key in prompts like 'cybersecurity presentation I worked on last month' and get immediate results, thus saving time.
See: Small Language Models Prioritize Privacy and Efficiency
Recall also supports voice search, so a hands-free environment. It also integrates well with aligned apps and browsers potentially improving the overall user experience by providing easy access to past content and flows.
Unintended Consequences?
- Companies might use an AI feature like Recall for employee surveillance to monitor activity at the workplace.
- With vast amounts of sensitive user data at risk, it's a natural target for hackers to try and exploit. It's kind of like having an expensive car in your driveway that's asking for robbers to steal it.
- Many feel uncomfortable knowing that every move they make is digitally recorded (even despite Microsoft's claims that it's encrypted, and stored/analyzed locally). Experts warn of physical access breaches.
When is the public release?
Recall's public release was originally postponed due to widespread concerns but Windows Insiders will be able to access it this October 2024 and wider distribution is expected thereafter. Initially, it will only work on devices with certain AI ready hardware.
See: 5 Billion Profiles: Class Action Lawsuit Accuses Oracle of Privacy Breach and “Global Surveillance”
Outlook
The balance between improving productivity and ensuring data security will determine the feature’s success or failure. We anticipate this AI feature to be full of conflicts and the risk to outweigh the benefits.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Privacy and Crypto Shaken as Telegram’s CEO Arrested
Crypto and Privacy | Aug 26, 2024
Image: Freepik
Pavel Durov’s arrest raises privacy concerns and crashes Toncoin
Over one of the last summer weekends before kids go back to school, the Founder and CEO of popular texting platform Telegram, Pavel Durov, was arrested by the French police on August 24, 2024 at Le Bourget Airport near Paris. Authorities detained Durov claiming that the Telegram platform is being used for illicit operations, such as money laundering, drug trafficking, and the distribution of illegal content including images of sexual abuse of children.
See: Meta Agrees to Pay $14B to Texas for Data Privacy Settlement
This high profile arrest has shaken the IT community, especially supporters and those around Durov's Telegram crypto project The Open Network (for everyone) or Toncoin (TON) which sank 20% when the news broke and is still trying to recover currently trading at $5.61.
Implications and Reactions
The Telegram platform strongly defended its moderation practices despite all the accusations and arrest of their founder, claiming that the platform follows the Digital Services Act in the European Union, and expressed confidence in their leaders innocence. They have 'nothing to hide'.
Statement from the TON Community
Following the recent news related to the Telegram’s founder Pavel Durov, we want to assure everyone that the TON community remains strong and fully operational.
As a community committed to freedom of speech and decentralization, we stand firmly…
— TON 💎 (@ton_blockchain) August 24, 2024
The news quickly reverberated with high profile industry leaders from Vitalik Buterin voicing concerns of software communication platforms in Europe to Elon Musk demanding Durov's release, setting up a future showdown of Western governments who are trying to crack down on illegal activity on digital networks versus encryption, privacy, free speech and decentralized philosophy.
I've criticized Telegram before for not being serious with encryption.
But (given the info available so far: the charge seems to be just being "unmoderated" and not giving up people's data), this looks very bad and worrying for the future of software and comms freedom in Europe.
— vitalik.eth (@VitalikButerin) August 25, 2024
See: The Battle for Privacy in the Digital Age
Outlook
Platforms like Telegram with almost a billion users globally are essential for communication, especially in areas like Russia and Ukraine. What might happen if government and industry fail to strike a balance between security, privacy, and content management in a global context? This story and its fallout is developing.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Meta Agrees to Pay $14B to Texas for Data Privacy Settlement
Privacy Regulation | Aug 2, 2024
Image: Freepik/upklyak
Meta's $1.4B Settlement for Biometric Data Violations, the Largest Privacy Settlement by a Single State
Meta Platforms Inc. (parent company of Facebook), has agreed to a $1.4 billion settlement with the state of Texas for allegedly collecting and using biometric data from millions of Texans without their consent (see final order)
See: Meta Files New Patent: Voice ID Data for User Authentication…Progress or Privacy Concern?
This comes after Meta was fined a record-breaking €1.2 billion ($1.3 billion) by the European Union in May 2023. Given the grave consequences of violating someone's biometric privacy, this compensation is the biggest of its type. Just another cost of doing business?
Lawsuit and Settlement
- The lawsuit, which was filed in 2022, accused Meta of utilizing facial recognition technology to gather biometric information from users by means of its "Tag Suggestions" tool, which recognized people in Facebook images automatically.
- The office of Texas Attorney General Ken Paxton contended that the Capture or Use of Biometric Identifier Act (CUBI) was breached by this approach. The Act mandates specific user agreement for the gathering of biometric data.
- Meta will pay $1.4 billion over the course of five years with the first $500 million installment, due within 30 days of the settlement announcement.
- Additionally, Meta is required to notify the Texas Attorney General's office of any future actions involving biometric data, giving the state sixty days to raise objections.
Implications
- Meta has now removed more than 1 billion unique facial recognition templates and stopped offering Tag Suggestions. According to the firm, talks with Texas authorities over biometric data compliance will be made easier with this settlement.
See: AI and Children’s Privacy and Consent
- This agreement comes after the European Union fined Meta a record-breaking €1.2 billion ($1.3 billion) in May 2023. Meta was fined by the EU for breaking the General Data Protection Regulation for transferring user data from EU users illegally to the US.
- These penalties highlight the growing international scrutiny and regulatory challenges that tech companies must manage related to user permission and data privacy. Any improper handling of personal data could result in serious financial and reputational consequences.
Attorney General Paxton:
“After vigorously pursuing justice for our citizens whose privacy rights were violated by Meta’s use of facial recognition software, I’m proud to announce that we have reached the largest settlement ever obtained from an action brought by a single State. This historic settlement demonstrates our commitment to standing up to the world’s biggest technology companies and holding them accountable for breaking the law and violating Texans’ privacy rights. Any abuse of Texans’ sensitive data will be met with the full force of the law.”
Conclusion
With the proliferation of advanced data-driven technologies like artificial intelligence, companies must prioritize data privacy compliance or face legal and financial repercussions. This settlement is a win for protecting consumer data and biometric privacy laws, and sets a precedent in the United States and around the globe. Learn more: 2023 Data Privacy in North America – Year in Review
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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AI Smart Guessing Algorithm Cracks 87 Million Passwords
Cybersecurity | Jun 21, 2024
Image: Freepik
A new algorithm cracks 87 million passwords in less than 60 seconds, challenging current cybersecurity measures.
Cybersecurity specialists have discovered a sophisticated guessing algorithm capable of cracking 87 million passwords in less than 60 seconds. This breakthrough highlights the necessity for stronger security measures in our increasingly digital environment.
Revolutionary Algorithm
Kaspersky's recent study revealed a revolutionary algorithm that blends old brute-force tactics with powerful machine learning techniques. This smart guessing system can forecast and test the most likely password combinations first, significantly lowering the time required to crack them.
See: Mastercard Announces Cybersecurity Winners and 6 New Start Path Participants
According to the data, 59% of 193 million credentials were hacked within 60 minutes, with an amazing 45% breached in less than a minute. By training on large password datasets, the system favours common character combinations, increasing its efficiency.
Antonov, a key researcher at Kaspersky:
"Smart algorithms make quick work of most passwords that incorporate dictionary sequences, and they even detect character alterations. "Using p@ssw0rd instead of password will not significantly slow down the algorithm."
How Does Smart Guessing Work?
Brute-force attacks, which loop through all conceivable combinations in search of a match, are generally inefficient. However, the smart guessing algorithm includes patterns such as dates, names, dictionary words, and keyboard sequences in its guessing technique. This makes it much more effective.
- According to Kaspersky's results, traditional brute-force methods cracked 10% of passwords in less than a minute, but the smart algorithm increased this figure to 45%. Over an hour, brute-force attacks had a success rate of 20%, compared to 59% for smart-guessing.
See: The State of Cybersecurity in The Fintech Industry
- Passwords created by humans tend to be predictable. Familiar names, significant dates, and common phrases are frequently employed. For example, in a YouTube experiment with over 200,000 people, the majority chose numbers like as 7, 37, 42, 69, 73, and 77 when asked for a random number between 1 and 100.
- Even when attempting random character strings, users frequently choose the centre of the keyboard. Because algorithms are intended to spot these typical patterns and character replacements, their predictability makes password cracking easier.
Cybersecurity Implications
Individuals and companies are advised to establish stricter password procedures. Simple replacements such as "p@ssw0rd" instead of "password" provide minimal additional protection. To improve security, users should use more complicated and unpredictable passwords that include upper and lower case letters, digits, and special characters.
Improving Password Security
- Your passwords should be at least 12 characters long and include letters, numbers, and symbols.
- Avoid easily guessed information, such as names, birthdates, or common words and patterns.
See: Blakes: Cybersecurity Trends in Canada: A 2023 Perspective
- Use Password Managers like LastPass and 1Password that can generate and store secure, unique passwords for all of your accounts.
- Enable multi-factor authentication (MFA) which is another layer of security which can dramatically minimize illegal access.
Conclusion
With the development of smart guessing algorithms, individuals and organizations are advised to proactively strengthen their defenses by adopting more complex passwords to protect their digital identities and online activities. It's also important to stay informed of the latest cybersecurity threats and protections.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Is AI Going to Change Fintech Security?
Jun 17, 2024
Image: Freepik
Artificial intelligence has experienced unprecedented growth in the last few years, turning what was once a sci-fi concept into reality. This technology has been injected into almost every industry to streamline processes and automate tasks, and the fintech sector is no exception.
Modern financial systems have always relied on technological advances to bolster security and introduce new features. With AI opening new avenues, many are wondering: will AI change fintech security?
AI in Fintech
In its simplest form, the answer to this question is that AI has already changed the face of fintech security. Many companies within the sector have already employed AI to beef up security and help identify risks before hackers or thieves act.
There are numerous ways in which AI is being used, with those listed below being the most common.
Know Your Customer (KYC) Verifications
One of the most basic security measures in fintech transactions is customer verification. Often called Know Your Customer, this process involves verifying the information provided by a client by cross-referencing it with official identity documents.
AI is often equipped with optical character recognition (OCR), which enables the AI to read scanned documents. This streamlines the process of verifying if the papers provided by a customer match the information they supplied.
Implementing AI in this process improves the verification speed, but, more importantly, it boosts efficiency by removing the human error factor and preventing verification whenever the information does not correspond.
Attack Detection
According to a 2023 report by Sophos, approximately 64% of financial institutions surveyed were attacked with ransomware in 2022. Ransomware, among other attacks, is a constant threat to companies operating in the fintech sector, with hackers eager to access confidential financial information.
To mitigate the risks of being attacked, many fintech suppliers install AI that analyzes the vast amounts of data sent and received from company networks and servers. This analysis occurs in real time and can quickly identify suspicious patterns and activities.
Anything flagged by AI algorithms can be reported to security personnel to investigate and act on before an attack is launched or a vulnerability is exploited. This helps reduce the fallout from attacks and shows security teams where to bolster their defences.
Fraud Prevention
Aside from cyberattacks, fraud and money laundering are among the most prevalent threats within the fintech sector. These refer to criminal organizations using services to mask (or clean) their cash earned through illicit activities and make it appear as though it is from a legitimate source.
While companies in the fintech industry have always employed measures to identify and block these transactions, these have never been foolproof. With AI, the detection of money laundering is more precise and effective, limiting criminals’ chances of achieving their goals.
AI equipped with machine learning is trained to identify and raise the alarm on suspicious transactions, including attempted account takeovers, money funnelled through multiple channels, and large amounts of money being moved between accounts.
Automation
When money laundering, fraud, or attacks on an account are suspected, AI already alerts company security teams of the activity. However, many companies are going one step further by allowing AI to interact more extensively whenever such activities are detected.
Allowing artificial intelligence to freeze accounts and block transactions can stop many illicit activities before they are completed. This ensures the integrity of systems and prevents money from being transferred when it shouldn’t be.
However, it also allows security teams and the relevant authorities more time to investigate the circumstances surrounding the transaction. If everything is in order, the transaction can proceed, and the AI can be taught what circumstances are within allowable parameters, ensuring a false alert is not raised again.
Behaviour Analysis
Another area where AI is being employed is in tracking and building user-profile behaviour analytics. This delves into each user’s everyday practices, routines, and idiosyncrasies to help develop a standard practice profile.
When customers log into their accounts and perform transactions or activities far outside their regular behaviour patterns, AI can quickly identify them and alert the fintech operator or take proactive steps (as mentioned above) to protect the account.
Once verification has been performed to ensure that the user in the account performing the activities is the authorized person, services can resume. As with automation, this can assist in identifying possible account takeovers or stop activities in cases where an account’s security has been breached.
Safer Transactions
With the above roles undertaken by AI, financial technology companies are better equipped to handle cyberattacks and can more easily detect fraudulent transactions. They can do this much more efficiently and often in real time, meaning that no losses can occur that aren’t immediately noticed or prevented.
As AI secures financial transactions, other industries are also beginning to embrace it. The iGaming sector, for one, has also started using AI in a wide range of areas to ensure players are legitimate and that transactions are secure. Many sites, such as eCheck Casinos, are also using AI in their security measures to prevent attacks.
Conclusion
With corporations like Google, Meta, and OpenAI racing to create the most advanced AI technology, further roles in fintech security will undoubtedly emerge. These roles must be carefully balanced with the threats posed by AI.
These include the privacy of the massive amounts of data that AI uses, transparency as to how AI calculates things and the decision process it follows, and whether or not an AI holds any bias. The ethical issue of using AI must also be considered, with many OpenAI employees openly speaking against it.
If these risks are navigated correctly, the future of fintech security could be significantly transformed, hopefully benefiting every company in the industry and every user of fintech services.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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