DEV Community

Cover image for 7 Steps to Building Anti-Fraud System for Digital Wallets
Cossack Labs
Cossack Labs

Posted on

1

7 Steps to Building Anti-Fraud System for Digital Wallets

The popularity of digital wallets makes them an attractive target for malicious actors. Can we develop a secure e-wallet that never pops up on the list of compromised products? According to Nelson Mandela, “It always seems impossible until it’s done”. Let’s give it a try!

The game is won by those who know the rules and how to use those to their advantage. You know what your opponent is after and what they target: The system and the user. All you need is data and proactive measures to build a strong anti-fraud system.

Use mobile apps and server-side as valuable sources of data to identify patterns, detect anomalies, and cope with vulnerabilities. Refer to proactive measures, device attestation, authentication, integrating KYC & AML, and user education to build an effective anti-fraud system. Let’s have a quick look at each of these 7 steps.

Step #1 Proactive anti-fraud measures help to manage the uncontrollable – human factor, differentiating between “normal” and “abnormal” user behaviour. We can identify suspicious/malicious users and define “stop factors” via collecting data and calculating risk scores.

Step #2 User education: allows them to protect their assets better if they know about risks and are asked for additional authentication before a transaction can be completed.

Step #3 Authenticating and re-authenticating: Choosing the appropriate user identity verification method is paramount and will depend on the specific use case.

Step #4 Integrating KYC (Know Your Customer) and AML (Anti-Money Laundering) are crucial for identity verification and fraud prevention.

Step #5 Enabling remote device attestation helps to differentiate between a legitimate and a compromised one.

Step #6 Smart balancing between usability and security allows to win users’ hearts and protect their assets at the same time.

Step #7 Working with security researchers is a promising collaboration for mitigating vulnerabilities.

For more information on building an anti-fraud system, see our informative engineering post.

Do your career a big favor. Join DEV. (The website you're on right now)

It takes one minute, it's free, and is worth it for your career.

Get started

Community matters

Top comments (0)

👋 Kindness is contagious

Dive into an ocean of knowledge with this thought-provoking post, revered deeply within the supportive DEV Community. Developers of all levels are welcome to join and enhance our collective intelligence.

Saying a simple "thank you" can brighten someone's day. Share your gratitude in the comments below!

On DEV, sharing ideas eases our path and fortifies our community connections. Found this helpful? Sending a quick thanks to the author can be profoundly valued.

Okay