Anti-Money Laundering Alert Optimization Using Machine Learning with Graphs

• URL: http://arxiv.org/abs/2112.07508v1
• Date: Tue, 14 Dec 2021 16:12:30 GMT
• Title: Anti-Money Laundering Alert Optimization Using Machine Learning with Graphs
• Authors: Ahmad Naser Eddin, Jacopo Bono, David Apar\'icio, David Polido, Jo\~ao Tiago Ascens\~ao, Pedro Bizarro, Pedro Ribeiro
• Abstract summary: Money laundering is a global problem that concerns legitimizing proceeds from serious felonies (1.7-4 trillion euros annually) We propose a machine learning triage model, which complements the rule-based system and learns to predict the risk of an alert accurately. We validate our model on a real-world banking dataset and show how the triage model can reduce the number of false positives by 80% while detecting over 90% of true positives.
• Score: 0.769672852567215
• License: http://creativecommons.org/licenses/by/4.0/
• Abstract: Money laundering is a global problem that concerns legitimizing proceeds from serious felonies (1.7-4 trillion euros annually) such as drug dealing, human trafficking, or corruption. The anti-money laundering systems deployed by financial institutions typically comprise rules aligned with regulatory frameworks. Human investigators review the alerts and report suspicious cases. Such systems suffer from high false-positive rates, undermining their effectiveness and resulting in high operational costs. We propose a machine learning triage model, which complements the rule-based system and learns to predict the risk of an alert accurately. Our model uses both entity-centric engineered features and attributes characterizing inter-entity relations in the form of graph-based features. We leverage time windows to construct the dynamic graph, optimizing for time and space efficiency. We validate our model on a real-world banking dataset and show how the triage model can reduce the number of false positives by 80% while detecting over 90% of true positives. In this way, our model can significantly improve anti-money laundering operations.

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