An FBI warning Monday about the rise of a crypto scheme called pig slaughter highlights the need for financial institutions to implement more sophisticated fraud detection programs as part of their own digital transformation efforts.
Scammers who slaughter pigs usually make contact through various social media or dating apps and develop long-term communication with the victims. After gaining victims’ trust over time, they convince victims to invest in rogue cryptocurrency platforms. The fake websites or apps allow victims to track their investments and show huge profits, which often leads to additional investments.
While the general public needs to learn how to recognize and avoid scams, “governments, financial institutions and security companies should also take responsibility for managing the rising risks,” Jan Santiago, deputy director of the Global Anti-Scam Org, told SC Media.
Although fraud targets consumers, the responsibility often lies with financial institutions to incorporate fraud prevention mechanisms that could flag suspicious transactions, especially as digital transformation has made it easier for fraudsters to carry out attacks in recent years.
James Brodhurst, principal advisor at Resistant AI, said in a recent article in PaymentsJournal that because fintech companies are using software-as-a-service to extend the reach of their business, they are web-based fraud-as-a-service Countering tactics must be deployed “at a level never seen before” and “with shockingly low risk”.
He said that AI and machine learning tools can “push back and try to beat cybercriminals at their own game” by boosting detection rates and protecting automated systems from compromise.
Global Anti-Scam Org also suggested banks and trading platforms to improve automatic alerts and immediately remind investors once a suspicious transaction is detected. Also, they should explain in detail to the general public how a certain type of scam works in order to raise security awareness.
The last point aligns with the FBI’s own recommendations to consumers, which follow generally best standards: verify the validity of each investment opportunity; Be on the lookout for domain names that mimic legitimate financial institutions, especially cryptocurrency exchanges; misspelled URLs, often with a slight deviation from the financial institutions’ actual website, should raise red flags; and do not download any suspicious looking apps or use them as an investment tool unless you can verify the legitimacy.
To address the growing vulnerabilities in the crypto market, financial institutions and cybersecurity organizations should also increase their own recognition and take the time to explore tools not typically considered in traditional banking systems, said Chen Arad, co-founder and chief operating officer of Solidus Labs , a cryptonative provider of risk monitoring and market surveillance. He specifically pointed out Web3 – the internet service built with decentralized blockchains.
And since recovering funds after executing a crypto scam is notoriously difficult, largely due to the immutability and anonymity of digital currencies, managing upfront risk becomes crucial, Arad added. “Crypto is a great opportunity to transform and monitor financial risks.”