Towards Collaborative Anti-Money Laundering Among Financial Institutions

• URL: http://arxiv.org/abs/2502.19952v1
• Date: Thu, 27 Feb 2025 10:22:55 GMT
• Title: Towards Collaborative Anti-Money Laundering Among Financial Institutions
• Authors: Zhihua Tian, Yuan Ding, Xiang Yu, Enchao Gong, Jian Liu, Kui Ren,
• Abstract summary: Rule-based methods were first introduced and are still widely used in current detection systems.<n>In practice, money laundering activities usually span multiple financial institutions.<n>We propose the first algorithm that supports performing anti-money laundering over multiple institutions.
• Score: 14.148199080030574
• License: http://creativecommons.org/licenses/by/4.0/
• Abstract: Money laundering is the process that intends to legalize the income derived from illicit activities, thus facilitating their entry into the monetary flow of the economy without jeopardizing their source. It is crucial to identify such activities accurately and reliably in order to enforce anti-money laundering (AML). Despite considerable efforts to AML, a large number of such activities still go undetected. Rule-based methods were first introduced and are still widely used in current detection systems. With the rise of machine learning, graph-based learning methods have gained prominence in detecting illicit accounts through the analysis of money transfer graphs. Nevertheless, these methods generally assume that the transaction graph is centralized, whereas in practice, money laundering activities usually span multiple financial institutions. Due to regulatory, legal, commercial, and customer privacy concerns, institutions tend not to share data, restricting their utility in practical usage. In this paper, we propose the first algorithm that supports performing AML over multiple institutions while protecting the security and privacy of local data. To evaluate, we construct Alipay-ECB, a real-world dataset comprising digital transactions from Alipay, the world's largest mobile payment platform, alongside transactions from E-Commerce Bank (ECB). The dataset includes over 200 million accounts and 300 million transactions, covering both intra-institution transactions and those between Alipay and ECB. This makes it the largest real-world transaction graph available for analysis. The experimental results demonstrate that our methods can effectively identify cross-institution money laundering subgroups. Additionally, experiments on synthetic datasets also demonstrate that our method is efficient, requiring only a few minutes on datasets with millions of transactions.

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