A recent cybersecurity report from Cato Networks has revealed the emergence of ProKYC, a sophisticated AI-powered tool designed to bypass Know Your Customer (KYC) protocols on cryptocurrency exchanges. This tool marks a new phase in cybercriminal tactics, moving beyond traditional methods like purchasing fake identification documents on the dark web.
ProKYC uses artificial intelligence to create entirely new, realistic identities. It can generate fake identification documents, such as passports or driver’s licenses, and produce deepfake videos. These capabilities allow users to successfully pass facial recognition systems that compare live webcam images with government-issued IDs.
In a demonstration, the tool was shown to generate an AI-created face, which was then embedded into a template of an Australian passport. A deepfake video was also used to pass KYC checks on Bybit, a major crypto exchange based in Dubai.
Cato Networks highlighted that ProKYC’s advanced capabilities increase the risk of New Account Fraud (NAF), making it easier for malicious actors to open accounts on cryptocurrency platforms. ProKYC is available for an annual subscription of $629, which includes features like facial animation, fingerprint generation, and verification photo creation. Beyond crypto exchanges, the tool also claims to bypass KYC measures for payment services such as Stripe and Revolut.
The emergence of such tools presents significant challenges for financial institutions, as they must find ways to detect fraud without overburdening users with stringent security measures that could generate false positives. Human oversight may be necessary to identify inconsistencies in video quality and facial movements.
The potential consequences of identity fraud are severe. In the United States, penalties for such offenses can result in fines and up to 15 years in prison, underscoring the need for enhanced fraud detection measures as these AI-driven tools become more prevalent.
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