Protecting remittance flows in a stablecoin world

With this new stablecoin frontier comes a new class of threats. The same traits that make stablecoins powerful also create new vulnerabilities that fraudsters are quick to exploit.

Stablecoins themselves aren’t inherently dangerous; for businesses leveraging this new technology, it’s crucial to implement the necessary safeguards to detect and prevent misuse.

Understanding stablecoin fraud in the remittance space

Fraud in the stablecoin remittance ecosystem is more nuanced than in traditional banking. Importantly, it’s not necessarily riskier but it is different. While stablecoins move value across borders efficiently via blockchain rails, the journey often starts and ends in fiat - through mobile money wallets, banks, cash agents, or OTC brokers.

Stablecoin remittances still rely on real-world financial infrastructure, and that’s where much of the fraud occurs. This makes omnichannel fraud detection essential. It’s not enough to monitor blockchain transactions in isolation or just screen fiat inflows and outflows. Businesses need a holistic view of user activity across every touchpoint - fiat, crypto, device, network, and behavioral patterns - to detect emerging threats and protect legitimate users.

Today, new vectors have emerged with the potential to take advantage of a blockchain's technical complexity and regulatory lag. Key fraud typologies include:

• Transaction laundering: Illicit actors hide the origin of funds by routing them through seemingly legitimate remittance transactions
• Synthetic identities: Fraudsters create fake personas to open wallets and transact anonymously
• On/off-ramp manipulation: Criminals exploit weak know-your-customer (KYC) and/or anti-money laundering (AML) controls during fiat-to-crypto conversion points
• Illicit fund flows: Transferring proceeds of crime across borders, undetected
  

Unlike traditional remittance fraud, these schemes often involve multiple currencies, exchanges, wallets, and decentralised platforms, making detection harder. Fraudsters exploit regulatory arbitrage, hopping across jurisdictions with loose or unclear crypto oversight.

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The unique fraud challenges in the African market

Africa's remittance ecosystem presents a unique blend of innovation and vulnerability. Key challenges include:

• High levels of informal financial activity: Cash-based economies and peer-to-peer transfers make tracking transactions difficult
• Regulatory fragmentation: Policies vary widely across the continent, creating loopholes that bad actors exploit
• Mobile money dominance: With over 2 billion registered mobile money accounts (GSMA, 2025), fraudsters find creative ways to move value between mobile wallets and crypto platforms
• Inconsistent KYC and AML standards: ID systems and enforcement capabilities make it easier to onboard fake identities or circumvent compliance checks

Across many African and Asian markets, identity verification is still highly fragmented. Some countries rely on national ID systems, others on voter cards, phone numbers, or even informal documentation — and enforcement capabilities vary widely.

Western-biased screening models often misclassify legitimate users from countries like Pakistan, Nigeria, or Bangladesh as high-risk  simply because the names don’t align with expected formats or because local naming conventions (e.g. multiple given names, compound surnames, tribal affiliations) confuse rigid matching systems.

This doesn’t just create inefficiencies - it erodes trust among users who are already underbanked and reliant on mobile-first financial tools. Fraud prevention systems must account for cultural, linguistic, and data variability, and not treat it as noise to be filtered out.

Why a localised approach to fraud prevention is essential

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Localisation is more than just supporting local languages or regional payment methods. When it comes to fraud prevention, localisation means aligning your detection logic, signals and risk models to the actual behaviours, on- and off-ramp methods and fraud patterns in each market.

What looks fraudulent in the UK might be completely normal in Kenya, and what’s common in Nairobi could raise red flags in Lagos. Without this kind of country-level behavioural intelligence, even the most sophisticated fraud systems risk missing the mark - either by letting real fraud through or falsely flagging legitimate users.

Africa is not a country. Fraud prevention needs to reflect the regional and cultural diversity of the continent. Fraud typologies in Nairobi don’t look like those in São Paulo or Johannesburg or Lagos. This means running fraud detection models built on US or EU data are unlikely to adequately protect your operations.

That’s because generic, global fraud detection models often miss local risk indicators - whether it's the common use of certain transaction patterns, the way remittance flows at different times of the year or by assessing potential fraud via unreliable indicators like IP addresses, for example.

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Beyond the red flags: Understanding local norms to detect real fraud

Fraud detection often depends on behavioural baselines but because these are so fluid, it’s key to leverage local partners who deeply understand the regions and their nuances.

For example, a user regularly topping up $5–$10 multiple times per day may look like a red flag in the West, but in mobile-first economies where micro-transactions are more common, this behaviour might not necessarily indicate fraudulent activity. Eg. in Kenya it's common for multiple family members to share a single wallet. This is especially true in rural households or among informal workers who pool funds. While this might be seen as "account compromise" in the West, it's actually a trusted and collaborative form of usage.

Device sharing is also frequent in rural communities, which means multi-user device signals need different treatment than in individualistic markets. Geo-IP mismatches are also expected in high-roaming populations, especially near borders. 

In informal settlements, entire neighborhoods may access mobile services through a single shared IP, which means blocking a suspicious IP could be likened to unintentionally shutting out an entire town.

Without local calibration, you risk triggering too many false positives – frustrating real users and letting actual fraud slip through.

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Fraud prevention strategies for remittance providers

Traditional fraud tools weren’t built for the speed, complexity, or regional variability of stablecoin-powered remittances.

To stay ahead of emerging threats, remittance providers must evolve beyond basic fraud screening. Best-in-class providers are adopting:

• AI and machine learning to detect emerging fraud patterns in real-time and continuously learn from new behaviours and signals
• Behavioural analytics that analyse user actions and flag deviations from typical usage
• Multi-layered security, including robust identity verification, device intelligence, and transaction screening
• Modular fraud orchestration platforms that integrate seamlessly with existing systems and scale across regions
• Omni-channel fraud detection, monitoring on-ramp via mobile money, blockchain-enabled transfers, and cashing out through physical agents 
• Geographic intelligence and corridor risk-scoring, enabling adaptive risk profiling by country pair and not just individual user profiles, and leveraging local knowledge to differentiate suspicious activity from legitimate flows 
• Anomaly detection across countries and networks to uncover patterns that may appear benign in isolation but signal risk in aggregate 
• Multi-currency support, tailored to prioritise relevant currencies and corridors in specific markets, reducing noise and sharpening focus on high-risk areas 
• Local data source integration to enrich datasets with on-the-ground intelligence, improving model accuracy and contextual decision-making 

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Future outlook: investing in proactive fraud prevention

Stablecoins aren’t going anywhere. They’re becoming foundational to modern finance, especially for underserved populations and remittance-reliant economies. But as adoption grows, so will fraud risks.

That’s why it’s no longer optional for businesses to invest in fraud orchestration platforms that combine real-time monitoring, compliance tooling, and localised threat intelligence. The ROI of working with a trusted fraud partner far outweighs the cost of going it alone.

At Orca, we help remittance providers across EMEA and LatAm safeguard their users, revenue, and reputation. Our platform is built for speed, flexibility, and scale – tailored to the nuances of each market we serve.

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Future-proof your remittance operations. Get your free fraud assessment with Orca.