Authentication is a critical security challenge for digital businesses of all kinds, with unauthorized access accounting for 43% of successful data breaches in businesses in the United States in 2020. Consumer losses due to fraud identity totaled $ 56 billion last year, and 53% of US federal losses. , state and local government agencies have observed an increase in takeover fraud over the past two years.
Cryptocurrency exchanges are a prime avenue for various types of fraud and therefore urgently need secure authentication to protect their platforms from bad actors. Cybercriminals stole an estimated $ 300 million worth of crypto accounts last year through phishing schemes, phone number hijacking, and bogus crypto exchanges. To make matters worse, exchanges have historically been almost entirely unregulated, but growing fraud threats are subjecting them to increased regulatory scrutiny.
In the July / August issue of Authenticated Payments Report, PYMNTS explores the latest developments in the world of payment authentication, including the unique cybercrime threats facing cryptocurrency exchanges. It also examines the authentication measures they deploy to keep themselves and their customers safe and how regulators around the world are cracking down on these exchanges to prevent digital fraud and money laundering.
Developments in the world of authenticated payments
One of the main reasons regulators closely monitor cryptocurrency exchanges is their role in cybercrime and money laundering. Known crypto payments to and from illicit entities fell by about half in 2020, but still totaled $ 10 billion, with various scams accounting for $ 2.6 billion of that total. Identified ransomware payments also jumped 311%, but this type of cybercrime tends to be underreported and the real growth is likely even higher.
Financial sector authorities around the world have responded to these increases in cybercrime by cracking down on trade with flawed Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. The UK recently banned major player Binance from regulated trading after the company refused to register with the Financial Conduct Authority (FCA), and Barclays and Santander banks have accordingly barred clients from signing up to the Financial Conduct Authority (FCA). ” make payments to Binance. The Kraken crypto exchange, meanwhile, has increased the KYC requirements for margin trading for U.S. accounts to comply with Securities and Exchange Commission (SEC) rules.
European bank The Authority’s (EBA) Strong Customer Authentication (SCA) mandate has been a game-changer for the entire financial sector since its entry into force as part of the revised Payment Services Directive (PSD2). The new SCA rules mandate multi-factor authentication (MFA) by payment service providers (PSPs) to protect e-commerce card transactions and other digital payments initiated by the customer. A new report from the EBA shows substantial progress on the SCA front, with 99% of EU merchants now able to support SCA and 94% of all payment cards in the block being SCA compatible. The EU has also announced its intention to launch a digital identity framework that could disrupt the current landscape of identity authentication.
To learn more about this and more payment authentication news, download this month’s Tracker.
How Coinbase keeps tabs on regulations and authentication needs in the evolving crypto exchange space
Cryptocurrency is making waves around the world, even mainstream finance heavyweights are starting to notice the space. However, regulators are also paying more attention to crypto and taking a closer look at the industry with the aim of stopping illicit activity. In this month’s report, Marcus Hughes, Managing Director Europe and international general counsel for cryptocurrency exchange Coinbase, explains why cryptocurrency exchanges must create the framework to meet the growing number of demands. regulations in space and explains why strong authentication is essential. to keep customers safe and satisfied.
Deep dive: How consumer authentication preferences can guide European crypto exchanges in the fight against fraud
The EU has cracked down on cryptocurrency compliance in recent years, and exchanges there have had varying degrees of success in complying with these new regulations. The new SCA rules require AMF, but this should only be the starting point for effective identity verification strategies. This month’s Deep Dive examines the fight against high-stakes stock exchange identity fraud and how research into consumer authentication preferences can help these companies design and implement solutions that not only curb fraud, but also improve the user experience.
About the report
the Authenticated Payments Report, a PYMNTS and Connection identifier collaboration, is the go-to monthly resource for updates on trends and changes in payment authentication.