Mastercard Launches TRACE Anti-Money Laundering Service in Asia Pacific to Combat Financial Crime

Mastercard has rolled out TRACE, an artificial intelligence-driven anti-money laundering solution, in the Philippines, marking the service’s debut in Asia Pacific. TRACE, which was first launched in the United Kingdom in 2018, has now expanded to the Philippines as part of a broader initiative to combat financial crime within the region’s rapidly growing Real-Time Payment (RTP) network.

TRACE aims to address the challenges faced by financial institutions in detecting illicit financial activity, especially in systems like RTP that facilitate rapid cross-bank transactions. While Real-Time Payments offer advantages in speed and efficiency, they also present an increased risk for money laundering activities. Criminals exploit this speed to quickly move funds between accounts, often using a network of “money mules” to hide their illicit transactions. These mules are typically unaware individuals who are manipulated through scams, such as investment or romance frauds, to help facilitate the laundering of money.

Until now, many financial institutions have used manual or in-house AI systems to detect such activities, but these methods typically focus on individual institutions' data without the comprehensive network-level view needed to trace widespread criminal schemes. TRACE aims to fill this gap by providing a larger-scale, cross-institutional view that can help trace suspicious transactions across the RTP network. By aggregating data from multiple financial institutions, TRACE enables banks to identify patterns of fraudulent activity that might otherwise go unnoticed.

The Philippines marks the second market after the UK to adopt TRACE, with local interbank network BancNet playing a central role in the implementation. BancNet, which operates the local RTP service InstaPay, has already onboarded 36 banks to use TRACE in tracking and preventing financial crimes. TRACE will assist these institutions in identifying and flagging suspicious accounts, including those involved in money mule activities.

The solution works by providing real-time alerts on potentially fraudulent transactions and monitoring funds as they move through the payment network. By allowing banks to act on these alerts quickly, TRACE aims to help financial institutions meet compliance requirements, such as adhering to the country’s recently enacted Anti-Financial Account Scamming Act (AFASA), which targets scams and fraudulent activities involving financial accounts.

TRACE is network-agnostic, meaning it is designed to be compatible with various RTP systems and can be implemented across payment networks in the Asia Pacific region. This flexibility makes it a valuable tool in the broader fight against financial crime, as it can be adapted to meet the specific needs and challenges of different markets.

Since its introduction in the UK, TRACE has helped identify thousands of money mule accounts, providing financial institutions with the intelligence needed to investigate and prevent fraud. With the Philippines now onboard, Mastercard aims to expand TRACE's reach further across the region, helping to mitigate the risk of financial crime as digital payments continue to grow.