Financial Crime Research Articles

Improving credit card fraud detection using machine learning and GAN technology

The motivation behind this study stems from identifying contemporary challenges associated with prosecuting electronic financial crimes. Highlights ongoing efforts to identify and address credit card fraud and fraud as there are many credit card fraud issues in the financial industry. Traditional methods are no longer able to keep up with modern methods of tracking the behavior of credit card users and detecting suspicious cases. Artificial intelligence technology offers promising solutions to quickly detect and prevent future fraud by credit card users. Datasets used to detect financial anomalies are affected by imbalances in financial transactions, and this study aims to address the imbalance of financial fraud datasets using adversarial algorithm techniques and compare them with the most commonly used methods in the scientific literature.The results showed that the function of the adversarial algorithm is consistent in several ways, including allowing researchers and interested parties to determine data growth rates, which helps bring the dataset closer to real-time data from financial markets and banks. This study proposes a hybrid machine learning model consisting of three machine learning algorithms: decision trees, logistic regression, and Naive Bayes algorithm, and calculates performance metrics such as accuracy, specificity, precision, and F1 score. Experimental results reveal varying degrees of accuracy in fraud detection. Model testing using the SMOTE method recorded an accuracy of 98.1% and an F-score of 98.3%. On the other hand, the oversampling and under sampling test methods showed similar performance, with the two methods recording an accuracy of 94.3 and 95.3 and an F-score of 94.7 and 95.1, respectively. Finally, the GAN method excelled, receiving a test score and accuracy of 99.9%, as well as exceptional precision, recall, and F1 score. As a result, we conclude that the GAN method is able to balance the data set, which in turn is reflected in the performance of the model in training and the accuracy of predictions when tested. Historical transaction analysis identifies behavioral patterns and adapts to evolving fraud techniques. This approach enhances transaction security and protects against potential financial losses due to fraud. This contribution allows financial institutions and companies to proactively combat fraudulent activities.

Strategic analysis of green finance crime to strengthen green economy in emerging markets

Green finance crime is money laundering stemming from illegal environmental destruction activities. Indonesia is experiencing this problem, where the number of forest clearing, plantations, and mining is increasing, but the results are not enjoyed by the surrounding community, and only enjoyed by a few people and corporations through illegal mechanisms. Ordinary legal mechanisms have not been able to prevent and crack down on green finance crimes in Indonesia. This study aims to analyze green finance crimes in order to optimize green economy transformation in Indonesia. This study used the juridical-normative method. The purpose of this study is to determine the risk mitigation measures for green financial crime in Indonesia. The result of this study is that the problem faced by Indonesia is that it does not understand environmental crime as a criminal act originating from money laundering so the instruments used to overcome this crime are still conventional. Coupled with the ever-evolving, various modes of washing are complex and involve different legal systems in different countries. This makes green finance crime difficult to eradicate with ordinary legal instruments. Thus, the authors propose mitigating legal risks through joint investigations covering multiple devices, multiple institutions, multiple laws and regulations, and multiple sanctions to overcome this.

Barcoding banknotes: Moving towards a system addressing cash anonymity in money laundering and terrorist financing operations

The anonymity in cash transactions present a significant hurdle in financial crime prevention. The central issue in addressing illicit cashflows lies in the difficulty to distinguish between licit and illicit cashflows amongst countless daily cash transactions. Addressing the issue poses the challenge of identifying a balance between an extreme of total surveillance, which can impinge on freedoms and disrupt cash-dependant economies, and total inaction, which allows illicit flows to persist. Between these two extremes lie various middle paths, some more effective than others in striking the required balance. Through an examination of the historical landscape of money laundering, the evolution of countermeasures, and the exploitation of gaps by criminals, a technologically advanced solution is proposed. In this regard, the implementation of traceable barcodes on banknotes aims to enhance transparency and traceability in financial dealings. A barcoded system is an innovative strategy to tackle money laundering and terrorist financing. This article assesses the viability, potential impacts and challenges of this system in policy formulation and economic frameworks, contributing to the discourse on enhancing anti-money laundering and counter-terrorist financing measures.

Research on the Causes and Prevention Mechanisms of Stakeholder Financial Crimes

Research on the Causes and Prevention Mechanisms of Stakeholder Financial Crimes

О некоторых вопросах квалификации уголовных правонарушений, связанных с легализацией (отмыванием) преступных доходов

The article raises the issues of qualification of actions of persons using criminal proceeds and making attempts to legalize (launder) them. The purpose of the article is to identify mechanisms and techniques of qualification of criminal offences related to legalization (laundering) of criminal proceeds, which include the main directions of criminal law nature, linking together the main idea of determining the main channels of legalization of criminally obtained property. At the same time, we should also take into account the scientific significance of the article, which consists in the empirical positioning of an in-depth understanding of financial crimes related to the acquisition of illegal property through legal channels, where also has a practical significance, closely related to the scientific significance, which consists in the development of specialized measures to qualify the range of offenses and crimes related to money laundering and other similar. As a methodological basis of the research it is supposed to consider purely legal techniques of analysis consisting of synthesis, deduction, induction and abstraction, as well as external-descriptive and internal-descriptive, including correlational studies of stable cohorts with high validity, achieved with a sample of 1000 units or more. The main results of the article are based on an overview conclusion regarding the implementation procedures of the mechanisms of Western countries in terms of introducing norms on the identification of ways to combat illegal legalization of property. The value of the study is exceptional due to its relevance in the transitional regimes of the new state. The practical significance of the results of the work implies the construction of specialized mechanisms, for which the act of implementation for law enforcement agencies is assumed.

Corporate Digital Identity: Revolutionizing Financial Crime Prevention in Banking

Corporate Digital Identity: Revolutionizing Financial Crime Prevention in Banking

Enhancing Cybersecurity in Financial Services using Single Value Neutrosophic Fuzzy Soft Expert Set

Cybersecurity has become a primary concern as the financial sectors generally handle increasing cyber-attacks and an increasing danger of financial crime. Recently, ransomware attacks have intensified, affecting enterprises, and crucial infrastructure worldwide. Ransomware employs sophisticated encryption techniques to encrypt data on the targeted device, then requests payment for decrypting the data. Artificial intelligence (AI) approaches involving ML were progressively employed in the domain of cybersecurity and significantly subsidized to preventing and detecting variety of threats. On the other hand, the several researchers that employed ML to identify ransomware are still constrained by the accuracy of models, the complication of malware, the high false-positive rate, and the lack of setting up the appropriate analysis environment. Therefore, there is a need to design efficient ransomware detection based on ML algorithms. This work introduces a modified Single Value Neutrosophic Fuzzy Soft Expert Set (M-SVNFSES) technique for cyberattack detection. The main purpose of the M-SVNFSES system is to detect and recognize the existence of cyberattacks in the financial sectors. In the M-SVNFSES technique, min-max normalization is used as an initial pre-processing stage. For the identification of cyberattacks in the financial sectors, the M-SVNFSES technique uses the SVNFSES model. To enhance its performance, the M-SVNFSES technique makes use of a bat optimization algorithm (BOA). The performance of the M-SVNFSES methodology was extensively studied using financial datasets. The experimental outcomes depicted that the M-SVNFSES method reaches optimal detection performance in attack detection process

THE LEGAL ENTITY: ACTIVE SUBJECT OF THE CRIME

In recent times there was an increase in criminality among legal entities due, in particular, to economic and financial factors. In this paper I wish to find an answer to the question of whether this form of criminal liability of the legal entity is necessary and at the same time effective by strengthening the current and contemporary legislation both in our country and in other countries. Since fiscal or financial crime is in a continuous procedure of amplification, it is important to be informed about the repercussions that the criminal acts committed by legal entities attract. The Romanian legislator has seen the problem of holding the legal entity criminally liable ever since the amendment of the Old Criminal Code by Law no. 278/2006 updating our legislation with the European one. Therefore, the criminal liability of the legal entity is currently regulated in the national legislation by the Criminal Code in force. This work offers a broad vision on the nature, respectively the foundations of the legal liability of the legal entity as an active subject of the crime, on the beginnings and evolution of this institution. I consider that a clear delimitation of the form and content of the guilt is necessary when we talk about the legal entity, a clear regulation of the intention and recklessness of the legal entity in order to be able to identify a different guilt of the natural person as an organ, so that in the situation where the natural person cannot be identified or cannot be criminally liable, the criminal liability of the legal entity can be engaged. The work is structured in such a way as to offer us both a theoretical and a practical part in order to better understand the issue of criminal liability of the legal entity. The case in this paper is from the judicial practice of the Economic Crime Investigation Service within the Bihor County Police Inspectorate.

Fight Against Financial Crimes – Early Detection and Prevention of Financial Frauds in the Financial Sector with Application of Enhanced AI

Fight Against Financial Crimes – Early Detection and Prevention of Financial Frauds in the Financial Sector with Application of Enhanced AI

Uncovering Hidden Realities: A Phenomenological Approach to Financial Crime in Public Procurement

This research aims to uncover the hidden reality of financial crime in the context of public procurement using a phenomenological approach. Through in-depth analyses of the experiences of financial criminals, procurement officials, and the communities involved, the research identifies the factors that drive fraud in the procurement process. The results show that the complexity of the procurement system, local social, economic and cultural pressures play a key role in the dynamics of financial crime. Dissatisfaction with complex procurement procedures and pressure to achieve a certain status are the main triggers for fraud. The implications of this research underscore the need for reforms in the procurement system, increased transparency and accountability. Practical suggestions involve additional education and training for procurement officials, addressing social pressure through social programs, and strengthening internal and external oversight. By highlighting the long-term impact of fraud in public procurement, this research provides a basis for policy and practice changes to create an environment of greater integrity and efficiency in the use of public funds. Collaboration with stakeholders, including researchers and academics, was identified as a strategic step towards achieving this goal.

ASSESSMENT OF ACTIVITIES OF TAX PRACTITIONERS, FORENSIC ACCOUNTANTS AND ECONOMIC AND FINANCIAL CRIMES COMMISSION AT CURBING CORRUPTION IN OSUN STATE, NIGERIA

This study sought to assess the activities of Tax Practitioners, Forensic Accountants and Economic and Financial Crimes Commission at curbing corruption in Osun State Nigeria. Survey research design was adopted. The population of this study consists of two hundred (200) members of staff (management, senior and junior) of the Office of the Accountant General, Osun State Ministry of Finance, Osun State Internal Revenue Service and other relevant Agencies in Osun State. Stratified and simple random sampling methods were adopted while Taro Yamane was used to determine the sample size of 133 and out this, one hundred and twenty-five (125) respondents filled and returned the questionnaire. Primary data were gathered via administration of questionnaire to respondents. Both descriptive and Correlation analysis were presented in the study. The findings revealed that there is a positive relationship between the activities of Forensic Accountants and activities of Tax Practitioners at curbing corruption in Osun State. It was also found out that proper financial management will help to reduce financial crime rate in Osun State, Nigeria. The study came to the conclusion that the abilities of accountants and the work of tax practitioners significantly contribute to identifying and minimizing fraud in Osun State, Nigeria. Finally, the study made the suggestion that forensic accounting courses be offered in Nigerian universities in order to improve the caliber of accounting graduates from these institutions, among other things.

Fraud prevention in the Indonesian banking sector using anti-fraud strategy

Fraud and financial crimes involving banking employees have become serious and complex problems throughout the world, including Indonesia. This study aimed to analyze a fraud prevention through anti-fraud strategy and modified situational crime prevention theory. Data were obtained using a questionnaire distributed and interviewed to accounting officers, marketing departments, customer services, tellers, operational supervisors and risk management of banks in Indonesia. Respondent filled in 217 questionnaires completely. The data analysis technique used is a path analysis technique with the WarpPLS. The results show that anti-fraud strategies have a positive effect on fraud prevention. Banking in Indonesia has succeeded in implementing anti-fraud strategy through a whistleblowing policy, which focuses on efforts to protect whistleblowers and disclose potential fraud, compliance with the implementation of internal controls in activity units, and the proper functioning of risk management. The modified situational crime prevention theory also has a positive effect, and religiosity is a moderating variable. The results have also informed that banks have attempted to create conditions and awareness for perpetrators that the benefits of fraud are less and not commensurate with the high risks borne, and narrowing opportunities and providing strict sanctions to perpetrators can prevent fraud.

Polityka przeciwdziałania praniu pieniędzy w Chińskiej Republice Ludowej

Anti‑money laundering policy in the People’s Republic of China Contemporary China is perceived as a country that has effectively remodeled its economic system. It may seem that optimized control mechanisms over the economy effectively eliminate any possibility of abuse, including those of a financial nature. Nevertheless, the introduced facilitations for foreign capital transfers also resulted in an increase in the scale of money laundering, defined as the illegal process of making large amounts of money generated by criminal activity appear to have come from a legitimate source. Since the beginning of the 21st century, China has made intensive efforts to implement financial crime prevention mechanisms and has tried to introduce tools functioning in this area in high developed countries. The article attempts to analyze the anti‑money laundering policy applied in the People’s Republic of China. The genesis, assumptions and goals of the reforms are presented. There is also an assessment of the effectiveness and efficiency of the implemented solutions.

Do corporate regulations deter or stimulate investment? The effect of the OECD anti-bribery convention on FDI

AbstractCountries prohibit firms’ transnational financial crime by coordinating their regulations under international organizations (IOs). Under these IOs, states threaten to prosecute firms’ foreign misconduct at home. Such threats can help conscript companies to diffuse sustainable business models abroad. This paper studies the effect of corporate criminal regulations on firms’ foreign direct investment (FDI). Critics of these policies claim they push firms’ investment away from host economies where financial crime is more likely to happen. Yet, regulations should also cut informal costs of crime and favor investment. I reconcile these opposed expectations and show they are special cases of the same argument. I claim that the effect of multilateral anti-bribery policies on FDI depends on the level of corruption of the host economy. It is null in non-corrupt countries. It is positive where corruption is moderate: here, laws provide legal leverage to refuse paying bribes and cut corruption costs. The effect is negative where corruption is endemic: here, anti-bribery laws expose firms to additional regulatory costs. I support the argument with multiple evidence. Company-level data on investment by 3871 firms between 2006 and 2011 show that regulated corporations have a $$27\%$$ 27 % higher probability of investing in moderately corrupt economies than unregulated firms, which plummets to $$-52\%$$ - 52 % in extremely corrupt countries. A synthetic counterfactual design using country-dyadic FDI flows corroborates this finding. Results show that regulatory policies harmonized by IOs change international competition for FDI in ways that do not necessarily harm regulated firms.

Legalization of criminal income using DeFi: typical schemes and risk indicators

Objective: to increase the effectiveness of countering the use of typical criminal money laundering schemes by identifying the technological and legal vulnerabilities of the DeFi infrastructure: decentralized exchanges, blockchain bridges, decentralized wallets, and privacy-enhanced currencies.Methods: general scientific (analysis and synthesis, induction and deduction, theoretical modeling, legal interpretation) and special methods of scientific cognition (structural-functional, constructive, situational, innovative, target-oriented, program-target, and risk-oriented).Results: the main trends in the development of money laundering using decentralized finance were outlined; the determinative significance of DeFi technological characteristics in the genesis of money laundering was revealed; the main types of money laundering using decentralized finance were identified; the schemes of committing crimes were studied and the criminogenic potential of DeFi infrastructure (decentralized exchanges, blockchain bridges, mixers, privacy-enhanced tokens, etc.) was assessed.Scientific novelty: it is proposed to consider money laundering using DeFi as a special type of digital financial crime. The article proposes the author’s typology of money laundering, substantiates the idea that the matrix of traditional financial regulation and AML standards cannot be applied to decentralized finance. It is argued that prevention of money laundering using decentralized finance should be carried out in close connection with the identification of risk indicators and the development of effective control measures at the points of entry of criminal incomes to centralized exchanges.Practical significance: the analysis of typical mechanisms of money laundering using DeFi allows a systematic approach to the organization of early crime prevention and can potentially become the basis to develop recommendations for financial intelligence and monitoring services.

Public procurement accounting as a tool to end corruption in Ghana: Forensic Accounting Perspective

This study's goal was to show how, by applying natural principles to human laws, forensic accounting might be utilized as a tactic to combat corruption in public procurement. Ten public universities in Ghana were selected for the survey, and in 2023 it examined views regarding policy fairness, government performance, and deterrent. 109 questionnaires were distributed to the procurement officers of the selected institutions using a simple random sampling. The collected data were subjected to a multiple linear regression analysis using the Smart PLS software. The study concluded that forensic accounting was ineffective in stopping procurement misconduct. It also discovered that there is currently very little usage of forensic accounting by the government. Governments at all levels ought to be more interested in forensic accounting and accountants, the report suggests, in order to keep an eye on and look into fraud cases that have been shown to be fraudulent. The management of the procurement authority needs to improve the criminology training provided to accountants and auditors. This training should concentrate on topics such as the nature and extent of financial crimes, ethical concerns, investigation, and remediation. This is necessary if forensic science is to be utilized as the primary tool for corruption and fraud prevention. The administration must also give careful consideration to the impartiality, independence, and reason of the courts.

A critical analysis of the cross-border financial crime risks inherent in the African continental free trade area

PurposeThis paper aims to provide authorities managing free trade zones, business enterprises, financial institutions and dedicated free zone customs, police and immigration command assigned to deal with aspects of movement of goods and persons in and out of the free zones with a clear understanding of the cross-border financial crime risks associated with the African Continental Free Trade Area and the risk control measures that combines human intelligence with advanced technology to combat cross-border financial crimes in the African Continental Free Trade Area.Design/methodology/approachA range of research activities would be used in this study. In addition to a sweeping literature review of academic, official studies and media writings, the main focus is on critically evaluating and analysing primary data by searching and collecting statutes, court cases, administrative rules and regulations and policy documents.FindingsThis paper identified bribery and corruption; modern slavery; and trade-based money laundering as the financial crime risks that are of priority concern to African Continental Free Trade Areas and demonstrated how countries can assess and mitigate these risks through adequate policies, procedures and controls including appropriate compliance management arrangement and adequate screening procedures to ensure high standards when hiring employees; corporate transparency; training on managing incidents of modern slavery, forced labour and third-party exploitation; and appropriate monitoring framework for trade-based money laundering activities.Originality/valueWhile many authors have written research papers on intra-African trade, none of those research papers explained how countries can assess and mitigate financial crime risks in free trade zones. This research paper describes the ways in which cross-border financial crime risks can be assessed and adequately addressed by the authorities managing free trade zones. This research paper analyses the risk assessment topic in line with the African Continental Free Trade Area with a focus on free trade zones in Nigeria. This research paper would help authorities managing free trade zones, commercial organisations and business enterprises to identify, prevent and mitigate cross-border financial crime risks. Zone managements and business enterprises that implement the risk-based approach, in line with the guidance given in this research paper, will be well-placed to avoid the consequences of inappropriate de-risking behaviour.

An Ensemble-based Fraud Detection Model for Financial Transaction Cyber Threat Classification and Countermeasures

Fraud remains a pervasive challenge within the banking industry, where financial institutions and their clients grapple with substantial annual losses. The proliferation of digital transactions and online banking has created new avenues for fraudsters to exploit vulnerabilities, leading to financial harm to unsuspecting victims. Consequently, the imperative to promptly and accurately detect fraudulent transactions has grown significantly, both as a safeguard against financial crimes and as a pillar of trust between customers and the banking sector. This paper introduces an innovative fraud detection model designed for bank payment transactions using advanced ensembling techniques. This study presents a comprehensive evaluation of an ensembling model conducted on the Bank Account Fraud (BAF) dataset. Through meticulous analysis, the performance of various base models and ensembling methods was assessed and compared, employing a variety of critical metrics including accuracy, precision, recall, and F1-score. The proposed ensemble model, referred to as "Stacking," exhibited remarkable performance, attaining a commendable accuracy score of 0.98. This result reaffirmed its prowess as a comprehensive and balanced solution to the multifaceted challenges of fraud detection. This study has paramount implications for the banking industry, offering a robust and adaptable solution to deal with the increasing threats posed by financial fraud. Furthermore, it emphasizes the significance of precision-recall trade-offs in fraud detection and underscores the potential of ensemble methods, particularly the "Stacking" model, to fortify the resilience and efficacy of existing security systems.

Green Financial Crime: Expose About Financial Crime In The Environment And Renewable Energy World

Financial crimes related to the environment and renewable energy sector, known as green financial crimes, have become a global concern due to their negative impact on the economy, environment, and sustainable development. This research aims to find out the phenomenon of green financial crimes, the impacts caused, as well as the challenges and obstacles in overcoming this problem. This research uses a doctrinal, descriptive-perscriptive research method using content analysis. To address these issues, this study recommends strategies involving the government, private sector, and society, such as counselling, strict supervision, and strict law enforcement. With a better understanding of green finance crime, it is hoped that various parties can work together to combat this crime so that renewable energy development and environmental preservation can run more efficiently and effectively to achieve sustainable development goals.

ICRB: An improved consensus‐based redactable blockchain considering contextual consistency

AbstractBlockchain is a distributed ledger proposed by Satoshi Nakamoto. It has become one of the most important networks for humans in the world. With the rapid development of blockchain technology, an increasing number of criminals are engaging in fraudulent activities, extortion and other financial crimes on the blockchain. Due to the immutability of blockchain, it is difficult for users to recover their losses. Some scholars have proposed the concept of the redactable blockchain. However, most redactable blockchain schemes fail to consider the impact of modification on the contextual economic relationships of the blockchain. We propose an improved redactable blockchain considering contextual consistency. Additionally, we utilize a security deposit mechanism to guarantee financial contextual consistency for the modified blockchain. We distribute users' security deposit account private keys to random users on the blockchain using Verifiable Secret Sharing, Verifiable Random Functions and other cryptographic primitives to achieve decentralized key management and modification. Experiments show that the performance of our scheme is acceptable in realistic situations.