Credit card fraud costs global economy $32bn: AMF

Global credit card fraud losses incurred by financial institutions and individuals reached an estimated $32.3bn in 2021, according to the Arab Monetary Fund (AMF), marking a significant increase of 13.8 percent compared to a year earlier.

The increase in credit card fraud losses is forcing financial institutions to explore innovative solutions and leverage cutting-edge technologies such as artificial intelligence (AI) and machine learning (ML) to detect and analyze fraudulent transactions, the AMF said in a report.

The fund emphasized that AI plays a pivotal role in strengthening credit card fraud detection with ML algorithms significantly contributing to achieving a predictive accuracy surpassing 94 percent. UAE banks

AMF urged the adoption of AI and ML to analyze credit card fraud operations within Arab countries.

The measures are expected to play a critical role in assisting banks and regulatory bodies to manage risks as fraudsters are increasingly exploiting modern technologies. Credit cards

The fund said this will necessitate alignment with the evolving global landscape in fraud prevention.

Combating credit card fraud

The AMF called for intensified innovation and collaboration with leading financial technology firms to develop new, machine learning-based fraud detection systems, according to the fund’s The Role of Artificial Intelligence and Machine Learning in Enhancing Credit Card Fraud Detection report.

The report said such partnerships offer financial institutions the opportunity to harness the full potential of these cutting-edge tools for more effective fraud prevention.

Furthermore, the AMF stressed the need for continuous development and updates to regulatory frameworks governing fraud detection systems.

It highlighted that ethical and responsible data usage, transparency, and accountability guidelines should be an integral part of these frameworks.

The fund urges financial institutions to foster cooperation by sharing data and pooling resources in their fraud detection efforts. Fraud, UAE

Collaboration between these institutions and supervisory and regulatory authorities can help identify fraud patterns spanning multiple organizations, making it more challenging for fraudsters to switch between institutions.

Credit card fraud is a global challenge and the AMF emphasized the importance of strengthening regional and international cooperation. The collaboration ranges from knowledge exchange to data sharing to adopting best practices to implementing innovative technologies within the confines of financial regulations.

News Source: Gulf Business