Introducing the Fintech Fraud DAO

February 8, 2023
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Introducing the Fintech Fraud DAO

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What is the Fintech Fraud DAO?

It’s the next big thing in fraud, catered to fintechs of all types, sizes, and structures.

We’re building a decentralized network (AKA a consortium) of fintechs that pool data to identify fraud before it proliferates.

As members of the Fraud and AML (FRAML) ecosystem, drawing on decades of fintech experience from working with 120+ customers in neobanking, crypto, peer-to-peer payments solutions, trading, and traditional finance, we believe now is the right time to address one of the industry’s long-standing top concerns.

The Fintech Fraud DAO is a DAO consisting of members from across fintech, serving all companies with a US retail customer base. Users of this network are able to obtain a comprehensive behavior profile pertaining to each of their end customers.

Why a DAO?

Decentralized Autonomous Organizations (DAOs) are tomorrow’s way to live in the world of Web3. A world where ‘Read, Write, Own’ becomes a reality.

In the context of our solution, you "Read" cross-platform aggregated fraud data, you "Write" anonymized data into our secure database, and "Own" your fraud infrastructure.

All this occurs by combining our datasets with your choice of Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) data sources for KYC (Know your customer) and AML (Anti-Money Laundering) solutions.

How Does the Fintech Fraud DAO Work?

Typically, when thinking of consortiums and network-based fraud tools, the product that is always top of mind is Early Warning - built, owned, and operated by the seven largest banks in the US.

EWS served and continues to serve as the benchmark in fraud consortiums in the traditional finance sector. However, fintechs are a little more challenging to pin down, given the vast nature of their use cases, risk thresholds, and regulatory landscapes. With this in mind, the industry requires a network that is as open and extensible as possible, while ensuring the safety and security of its members.

However, a critical distinction is that the Fintech Fraud DAO is not a platform that ingests fraud signals or fraud labels. Instead, the network is an every signal platform — it provides a comprehensive aggregated view of users’ transactional behavioral profiles. By doing so, the output of the DAO provides a signal on the lifecycle of customers across fintech platforms.

Alleviate Fraud Concerns with 3 Simple Steps

  • Partner with us by sharing data into our platform using a simple UI or our open API
  • Obtain access to aggregated cross-platform data from the Fraud DAO
  • Combine this data with industry data sets (KYC, OFAC, PEP, EDD data, Transactions) to create complex business logic tailored to your needs.

The best part? It’s free to participate — a win-win!

Why Build a Consortium Product Now?

Unit21 has acquired over 100 fintech customers, which utilize the platform for fraud and AML solutions. During this period, a network-based fraud detection feature has become a viable and attractive proposition for most of these fintechs.

Some analysis of the data currently hosted in Unit21’s servers helped identify patterns, use cases, and potential solutions that can arise from this initiative.

We currently support:

- 3 of the 4 largest global crypto exchanges

- 3 of the 5 largest neobanks in the US

Over 80 other medium to large customers, resulting in:

- 60 million+ unique US phone numbers in our database

- 25 million+ unique US Social Security numbers in our database

And further analysis revealed that:

- 18% (About 10Million) US phone numbers have been seen at least 2 times in our database

- 10% (2.5M) SSNs have been seen at least 2 times in our database

Combining these sets with other data elements such as DOB, we concluded that (roughly)

- 1 in every 5 users has been seen across two or more fintech platforms in our network

What is the Role of a Member in the DAO?

Partnering with our Fintech data-sharing network in further building out the Fraud DAO will provide you access to insights from cross-platform activity, leading to more robust pattern detection of behavior across fintech networks.

Subsequently, this will result in a safer transactional network, significantly cutting operational, administrative, regulatory, and fraud-related costs. Subject to member approval, all the above insights will be available for Intuit to use and help identify fraud before it proliferates.

Give to get, not pay to play.

Signing on as members will allow you to become network administrators, helping govern the quality, integrity, and utility of the data within the network, and leaving data ingestion, storage, and security to us.

Over time, these insights will also be available within the core Unit21 dashboard, allowing more informed and efficient investigations and the creation of powerful cross-platform aggregated rules to help alleviate fraud concerns at scale.

Change the world with us!

We’re building the Fintech Fraud DAO for the community and would love your active participation in building out the next big thing in fintech and fraud fighting. As Polygon said — The future is DAO. PS: Join our Slack community so you can stay in the loop!

(Originally published on Medium).

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