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How UIDAI is using AI to tackle payment frauds

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How UIDAI is using AI to tackle payment frauds

Context- As more frauds related to the Aadhaar-enabled Payment System (AePS) come to the fore, the Unique Identification Authority of India (UIDAI), has turned to artificial intelligence-based systems in a bid to limit the cases — this includes developing technologies around fingerprinting and facial recognition.

Minister of State for Finance Bhagwat Karad told Parliament on Monday (July 31) that to prevent AePS frauds by the use of spoofed fingerprints during Aadhaar authentication, the UIDAI has rolled out an in-house Artificial Intelligence/Machine Learning technology-based Finger Minutiae Record – Finger Image Record (FMR-FIR) modality which is able to check the liveness of a fingerprint to detect the use of cloned fingerprint during the authentication process.

(Credits- Telangana Today)

In May this year, Airtel Payments Bank collaborated with the National Payments Corporation of India (NPCI) to roll out a facial recognition-based authentication measure for such transactions. The technology has been developed in-house by the UIDAI.

How does the Aadhaar fingerprint technology work?

  • The technology was rolled out in February this year and uses a combination of both finger minutiae and finger image to check the liveness of the fingerprint captured. The measure was implemented after instances of people creating fake fingerprints using silicone to syphon off money from unsuspecting individuals’ bank accounts were reported. The problem gets compounded on account of the fact that a large part of the AePS user base is in rural areas.
  • In effect, the AI-based technology is able to identify whether the fingerprint is from a real, or ‘live’ finger, or a cloned one.

Payment frauds on the rise

  • According to the Home Ministry, in the financial year 2020-21, 2.62 lakhs financial crimes, such as money laundering, bribery, corruption and different kinds of frauds, were reported. The number jumped to 6.94 lakhs in 2022, a report, released by the Standing Committee on Finance
  • Citing data it received from the supervised entities of the Reserve Bank of India (RBI), the committee noted that payment-related frauds are on the rise in India – In FY21, the volume of such frauds was a little over 700,000, which by FY23, increased to close to 20 million.
  • However, due to limited awareness about cyber frauds, a significant number of people do not report them to authorities, the committee said. According to the information submitted to it by the Indian Cybercrime Coordination Centre (I4C), in the year 2022, out of 6,94,424 complaints related to financial frauds only in 2.6 per cent of cases an FIR was registered.

Can technology alone solve the fraud problem?

  • Deploying technological measures to curtail financial frauds has its own limits, though. For instance, they have failed to thwart a number of frauds related to AePS, in which a business correspondent, a key member in the payment supply chain, is the culprit.
  • A business correspondent (BC) is an informal bank agent equipped with a biometric Point-of-Sale (PoS) machine, which works like a micro ATM.
  • If someone needs Rs 500, they have to give their bank details to the BC along with their Aadhaar-based biometric details and the BC will give them the Rs 500. However, officials aware of the matter said often, BCs misrepresent the amount they have paid an individual and input a higher amount in their system.
  • Unsuspecting individuals, especially in rural areas, do not always have the wherewithal to ask for a receipt that the BC is supposed to generate after each transaction.
  • There have also been instances of fingerprint cloning, which AI-based technologies — at least in theory — are better equipped to deal with.
  • Last December also, the Crime Branch wing of Haryana Police had raised a red flag on the AePS system, saying that cyber criminals are conducting financial frauds by syphoning off people’s vital data from the system and cloning the fingerprints available on documents on the government website.

Conclusion- The technology uses a combination of both finger minutiae and finger image to check the liveness of the fingerprint captured. The measure was implemented after instances of people creating fake fingerprints using silicone to siphon off money from unsuspecting individuals’ bank accounts were reported.

Syllabus- Gs-3; Science and Tech

Source- Indian Express

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