Kakao Pay Securities Builds AI-Based Fraud Detection System

Machine Learning-Based Detection of Suspicious Activity
Analyzes Access Environments and Fund Flows
Strengthens Anti-Money Laundering Efforts with Expert Hire

Kakao Pay Securities said on November 12 that it has built an artificial intelligence-based fraud detection system (AI FDS) and has been using it in live transactions since this month.

AI FDS combines the existing fraud detection framework with machine learning-based risk analysis. By learning from a wide range of transaction data and financial fraud cases, it identifies suspicious signs more precisely. It also detects connections between transactions and complex risk signals that may be difficult to identify from individual data points alone, and provides staff with the risk level of detected transactions and the basis for its assessment. Staff can then promptly review suspicious transactions and take necessary action.

The system’s scope of detection has been expanded to reflect the nature of securities transactions, which involve cash, stocks, and foreign currencies. It covers not only deposits and withdrawals and account opening, but also stock sales, currency exchanges, transfers of stocks into and out of accounts held at other securities firms, and changes to user information. The aim is to combat financial fraud targeting securities accounts, such as cases in which criminals hijack an account, sell the stocks held in it, and withdraw the proceeds or transfer the stocks to another securities firm.

The system also analyzes the environment in which transactions take place and the flow of funds. It combines various signals from transaction and access environments to identify situations in which account hijacking is suspected, while detecting signs of abnormal fund flows based on deposit and withdrawal patterns and connections between transactions. This is intended to address the risk of accounts being used for voice phishing, investment scams, illegal gambling, or illegal private lending.

The company has also strengthened its organization and added specialized personnel so it can assess the money laundering risks associated with transactions suspected of involving financial fraud. In March 2026, it reorganized its structure to integrate the operation of fraud detection and anti-money laundering functions. In July 2026, it appointed an expert in anti-money laundering and financial consumer protection with 26 years of experience in the financial sector to lead the team.

The company will also strengthen collaboration with its customer service center. It plans to improve the relevant systems so that, when suspicious transactions are detected, every step—from user verification and guidance to counseling, protective measures, and responses to customer losses—can be coordinated seamlessly.

Kakao Pay Securities said, "As financial fraud evolves by combining multiple methods and transactions, it is important to look beyond individual transactions and examine risk signals and fund flows together. With the launch of AI FDS, we will strengthen our response capabilities across our systems, organization, and specialized personnel to create an environment where users can trade with confidence."

This content was produced with the assistance of AI translation services.