Blockchain and DLT ( distributed ledger technology ) can mitigate fraud by creating immutable ledger transactions . How is it being employed today , and what are the barriers for organisations that currently aren ’ t leveraging blockchain technology ?
Adam Davies : Fintechs and other companies in financial services are always looking to understand the value that new technologies like blockchain ( distributed ledger technology ) can provide .
At FICO , we have pioneered a technique for blockchain / distributed ledger technology to improve model governance and observability .
We were recently awarded a patent for the use of blockchain technology to track the end-to-end provenance of the development , operationalisation and monitoring of machine learning models .
This allows us to offer explainability to all our customers and promote explainability in all our transactional fraud models and model development .
Grigory Yusupov : In financial services , blockchain can be used to increase the security and transparency of transactions . As an example , banks can use blockchain to streamline cross-border payments and reduce fraud through an unambiguous , immutable record of each transaction .
However , today ’ s adoption of blockchain and DLT is still often hindered by technical , regulatory , cost and organisational barriers .
One example of the regulatory challenges associated with blockchain and DLT is the new Transfer of Funds Regulation ( TFR ) in the EU , which mandates that all cryptocurrency transactions will need to carry identifying data of the sender and the receiver .
According to the new rule , compliance with TFR is mandatory for all Crypto Asset Service Providers ( CASPs ). One challenge for CASPs lies in GDPR compliance , as personally identifiable information ( PII ) should not be stored on blockchains or DLT .
However , to comply with the new regulations , CASPs need to know with whom they are doing business and continuously verify this information .
“Collaboration is critical , as technology alone cannot eradicate fraud ”
GRIGORY YUSUPOV REGIONAL DIRECTOR UK AND ROW , IDNOW
144 September 2024