Abu Dhabi, UAE – The Arab Monetary Fund said Wednesday that global credit card fraud losses incurred by financial institutions and individuals reached around US$32.3 billion in 2021.
The losses increased substantially by 13.8 percent compared to the previous year, WAM reported.
The Fund released a study titled “The Role of Artificial Intelligence and Machine Learning in Enhancing Credit Card Fraud Detection.”
It said these challenges compelled financial institutions and decision-makers to explore innovative approaches leveraging modern technologies.
This includes artificial intelligence and machine learning, coupled with their applications on big data, to detect and analyze fraudulent transactions.
The study noted artificial intelligence plays a pivotal role in strengthening credit card fraud detection, with machine learning algorithms contributing to achieving a predictive accuracy surpassing 94 percent.
Furthermore, the report recommends the widespread adoption of AI and ML for scrutinizing credit card fraud operations within Arab countries.
Such measures are crucial for assisting financial institutions and regulatory bodies in risk management and cost reduction, particularly as fraudsters increasingly exploit modern technologies.
This necessitates alignment with the evolving global landscape in fraud prevention.
The report calls for intensified innovation and collaboration with leading financial technology firms to develop new, machine learning-based fraud detection systems.
Such partnerships offer financial institutions the opportunity to harness the full potential of these cutting-edge tools for more effective fraud prevention.
Additionally, the report stresses the need for continuous development and updates to regulatory frameworks governing fraud detection systems.
Ethical and responsible data usage, transparency, and accountability guidelines should be integral components of these frameworks.
The report urges financial institutions to foster cooperation by sharing data and pooling resources in their fraud detection efforts.
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.
Highlighting the global nature of the challenge, the study underscores the importance of strengthening regional and international cooperation to combat credit card fraud.
This collaboration could involve knowledge exchange, data sharing, adoption of best practices, and the implementation of new technologies within the confines of local laws and regulations.
The establishment of international standards and regulations was also emphasized as an essential element in this endeavor.