NCR Corp. has formed an alliance with the University of Abertay Dundee in Scotland to reduce the estimated $1 billion in annual automated teller machine fraud losses worldwide.

The corporate-academic alliance, announced Thursday, seeks to uncover fraud threats to ATMs before they arise through a method known as "ethical hacking," which occurs when a company contracts with a computer security expert to try to penetrate the company's network to determine whether security holes exist that criminals could exploit.

"Ethical hacking is designed to stop would-be hackers and viruses before crimes occur," the Dayton, Ohio, ATM maker said.

The alliance between NCR, which operates a research and development center in Dundee, and the University of Abertay will focus on personal authentication measures required to gain access to ATMs, NCR said.

"The critical knowledge of illicit access to ATMs is an ongoing and a growing threat to many ATM users," the company said.

Companies have deployed about 1.5 million ATMs worldwide, and in Europe alone annual fraud losses have reached $696 million, according the European ATM Security Team, which is based in Edinburgh, Scotland.

NCR and the United Kingdom's Knowledge Transfer Partnerships graduate-placement program are funding the research at the university, the company said.

NCR did not disclose how much money it has devoted to the project.

This is the second time NCR and the university have worked together. An earlier collaboration resulted in the school offering Bachelor of Science and Masters of Science degrees in ethical hacking.

NCR has incorporated the program's findings into its research and development initiatives, the company said.

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