Anti-Money Laundering Detection

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20 papers3 papers in the last four weeks, with none the four weeks before. 0.0% of all new papers.

Oct 15, 2026

Money-Mule Detection as a Relational Learning Problem: A Study on the RBIH NFPC Dataset

Money-mule networks move criminal funds through many small transfers, each of which looks ordinary on its own. What marks an account as a mule lies outside any single transfer: in the counterparties and addresses its network shares, and in the shape of its activity over time. Production systems remain largely rule-based and see neither, while most research classifies transactions rather than accounts, recovering account-level risk only by aggregating afterwards. We instead score the account directly, reading the bank's relational schema as a heterogeneous graph in which rows are nodes and foreign keys are edges. Each account is scored from a multi-hop neighbourhood using per-column encoders, a relative-time encoding and HeteroGraphSAGE message passing, with that neighbourhood restricted to rows predating the account's own pre-flag cutoff so that no model sees evidence recorded only after the account was flagged. On a five-year Reserve Bank Innovation Hub (RBIH) retail-banking dataset of 400 million transactions and 94{,}063 labelled accounts, 2.6% of them confirmed mules, we compare against RelGNN, XGBoost, LightGBM and CatBoost trained on identical labels, splits and cutoffs. Our detector recovers nine in ten held-out mules at 83% precision and a 0.5% false-alarm rate, finding 115 more mules than the strongest tree ensemble given the same evidence. At the tuned thresholds the gap is mostly in recall: XGBoost and LightGBM lead across the first hundred alerts, but only the graph models hold their precision deep into the queue. Since the graph is the schema itself and every score is dated per account, the approach deploys on a bank's existing database without a custom feature graph build.

Owais Ahmad, Anirudh Deodhar

Applied Research, Quantiphi, Marlborough, MA 01752, USA

Financial Fraud Detection Anti-Money Laundering Detection Anti-Money Laundering Node Classification Relational Deep Learning Heterogeneous GNNs

Oct 13, 2026

Privacy-Preserving GNN Inference on Financial Transaction Graphs via Homomorphic Encryption

Anti-money laundering (AML) in financial networks requires modeling transaction patterns that span multiple institutions. In practice, however, banks cannot share account and transaction features due to strict privacy regulations. We propose a privacy-preserving graph neural network (GNN) inference framework tailored to this multi-bank setting. A central server holds the graph connectivity and pretrained model weights in plaintext, while each bank keeps its transaction features encrypted. Inference is then carried out entirely on encrypted features under the CKKS homomorphic encryption scheme, so that no plaintext transaction features or predictions are exposed to the server. The key to making this practical is an edge-centric GNN architecture, wherein message passing is expressed through operations on node--edge incidence matrices. This formulation not only preserves the edge-attributed multigraph structure of transaction networks but also reduces every aggregation step to plaintext--ciphertext matrix products. Since CKKS can evaluate only polynomial circuits, we also approximate each nonlinearity with a composite polynomial of the sign function, which we calibrate per activation site. On the IBM AML benchmark, our model achieves performance competitive with plaintext baselines, and with a consumer-grade GPU, classifies each queried transaction end-to-end in as little as 5.31 seconds, while per-transaction latency can be amortized to 1.65 seconds when optimized for throughput.

H. Çağrı Bilgi, Kemal Mutluergil, Ceren Yıldırım +2

Sabancı University, Istanbul, Türkiye

Anti-Money Laundering Detection Privacy-Preserving ML Graph Neural Networks Financial Fraud Detection

Oct 9, 2026

AMLworld-Compact: Importance-Weighted Downsampling for Cost-Effective LLM Evaluation and Error Diagnosis

Evaluating large language models (LLMs) on AMLworld's smallest test splits is costly because each of over a million targets requires a separate graph prompt. Sampling reduces this cost, but small balanced subsets change unweighted precision and F1. We introduce AMLworld-Compact, an evaluation set that retains every illicit test transaction and samples benign transactions from supervised-score strata. Its HT-Coreset protocol reduces evaluation targets by 271x and 611x on HI-Small and LI-Small. Horvitz-Thompson weights give unbiased full-test confusion-count estimates for fixed predictions; recall is exact, while precision and F1 are ratio estimates. In a held-out study using Graph Feature Preprocessor (GFP) features, one boosted-tree family defines strata for evaluating the other over 500 draws per configuration. At the released sizes, F1 RMSE is 0.00-2.58 percentage points versus 4.44-7.41 for uniform sampling with HT weights; conservative intervals remain broad. Under the evaluated graph prompts, seven open-weight LLMs have weighted precision near the predict-all-illicit baseline. In an outcome-stratified audit of 1,000 HI-Small few-shot outputs from one run per model, lexical checks pass for 84.5% of correct and 56.2% of incorrect binary verdicts, so these markers do not establish correctness. We release the evaluation sets, construction code, and audit tools at https://huggingface.co/datasets/typhoon-ai/AMLworldCompactEval and https://github.com/nat-nischw/AMLworld-Compact.

Natapong Nitarach, Phume Ngampornsukswadi, Pittawat Taveekitworachai +3

SCB DataX, SCBX Group · Independent Researcher

Stratified Sampling Anti-Money Laundering Detection LLM Evaluation LLM Auditing Financial Fraud Detection

Aug 23, 2026

KONTOGRAPH: Verified Point-in-Time Feature Consistency and Amortised Explanation for Real-Time Anti-Money Laundering under a 200 ms Decision Budget

Regulation (EU) 2024/886 obliges European payment service providers to settle euro credit transfers in under ten seconds, around the clock. This removes both the overnight batch window in which anti-money-laundering (AML) analytics traditionally ran and the settlement delay that made recovery possible, forcing detection, explanation and decision inside a single-digit-second envelope. We present KONTOGRAPH, an end-to-end AML pipeline for the SEPA Instant rail built under a self-imposed 200 ms 99th-percentile budget, and report an empirical study on 1,562,860 simulated payments with injected typologies and deliberately incomplete labels. Three findings are of interest beyond the system itself. First, a temporal graph network with per-node memory improves PR-AUC over a gradient-boosted tabular baseline from 0.0053 to 0.1717, a paired day-blocked bootstrap difference of +0.166 with 95% CI [0.105, 0.241]; per-node memory alone more than doubles the score. Second, expressing each feature once and compiling it to three execution backends, with equivalence enforced by property-based tests that perturb the future, surfaced three point-in-time violations that code review had passed--each of which would have inflated reported performance. Third, and most consequential for practice, exporting the deployed tree ensemble to ONNX changed only

7.4 \times 10^{-8}

in mean score yet altered 0.26% of decisions and inflated the alert volume by 12%, because 32-bit accumulation perturbs scores across a cost-optimal threshold of

3.98 \times 10^{-4}

. We argue that a serving-format conversion must be treated as a model change until measured, and that fidelity metrics for subgraph explainers can be vacuous when candidate neighbourhoods are small--a null result we report in full.

Ahmed Abolfadl

Faculty of Media Engineering and Technology German University in Cairo Cairo, Egypt

Anti-Money Laundering Detection Anti-Money Laundering Financial Fraud Detection Temporal Data Leakage Temporal GNNs

Aug 15, 2026

Detecting Money Laundering in Rwandan Mobile Money: A Machine Learning Framework

Mobile money has widened financial access across Sub-Saharan Africa and enlarged the surface for money-laundering and terrorism-financing (ML/TF) activity in ecosystems dominated by high-volume, low-value transactions. Rwanda is a case in point: several million active mobile-money users, telecom-led wallets on the MTN and Airtel networks, and a Financial Intelligence Centre (FIC) supervising transaction streams whose scale exceeds static rule-based monitoring. This paper develops and evaluates a transaction-monitoring framework aligned to the Rwandan AML/CFT regime under (i) extreme class imbalance (~0.1% prevalence), (ii) scarce and delayed labels, and (iii) bounded investigator capacity. Using SAML-D, a synthetic dataset of 9,504,852 transactions with 17 laundering typologies, we engineer account-centric behavioural features (rolling velocity, net-flow directionality, counterparty diversity, burstiness) and benchmark supervised classifiers (Logistic Regression, Random Forest, LightGBM), unsupervised anomaly detectors (Isolation Forest, Local Outlier Factor), a dense autoencoder, and a late-fusion meta-learner. Evaluation is operational: PR-AUC, recall at a calibrated ~90%-precision point, recall at top-K%, and alerts per 10,000. On the chronologically held-out test period, LightGBM attains PR-AUC = 0.0469, capturing 64 laundering cases at precision ~0.89 with 0.51 alerts per 10,000; the fusion stacker reaches PR-AUC = 0.0477 at precision ~0.91 and 0.46 alerts per 10,000, recovering 59 true positives. We map score bands to Rwanda-relevant analyst workflows and STR/SAR escalation, and outline a staged path from synthetic prototyping to real-data validation with the National Bank of Rwanda and FIC. The contribution is operational: a governance-aware pipeline and evaluation protocol calibrated to the constraints of an African mobile-money regulator, not a new algorithm.

Emmanuel Nahimana, Yaé Ulrich Gaba

African Institute for Mathematical Sciences (AIMS) Senegal, KM 2, Route de Joal, Mbour, Senegal · AI Research and Innovation Nexus for Africa (AIRINA Labs), AI.Technipreneurs, Cotonou, Bénin · Sefako Makgatho Health Sciences University, Pretoria, South Africa

Anti-Money Laundering Detection Anti-Money Laundering Financial Fraud Detection

Jul 20, 2026

Detection, Attribution, Narration: An End-to-End Pipeline for Explainable Money Mule Identification

Money mule accounts are critical facilitators of financial fraud, yet detecting them at scale remains challenging due to the heterogeneous nature of transactional and behavioural data. We present an end-to-end pipeline for customer-level mule detection comprising three stages: (1) a LightGBM classifier trained on 280 engineered features spanning transaction patterns, account demographics, network topology, and temporal behaviour; (2) a TreeSHAP attribution layer that decomposes each prediction into feature contributions; and (3) a large language model (LLM) module that converts SHAP attributions into analyst-facing natural-language narratives. We evaluate across three open-weight LLM families and assess explanation quality through analyst feedback. In a live production deployment, the system achieves a yield rate of 89%, up from 61% under the incumbent rule-based system, with monthly alert volume expanding from 211 to 302, reflecting broader true-positive coverage rather than increased noise. This corresponds to a 60% incremental adverse detection beyond existing review workflows, substantially outperforming the rule-based approach. Qualitative feedback from analysts indicates that LLM-generated narratives reduce cognitive load during alert triage. We further discuss implications of deploying LLM-augmented explainability in regulated financial environments.

Yuge Zhang, Yuanxing Zhang, Yichao Jin +7

OCBC, Singapore

Natural Language Explanation Generation Financial Services Financial Fraud Detection Finance Anti-Money Laundering Detection

Jul 11, 2026

SALT-GNN: Handling Dense Neighborhoods in Anti-Money Laundering Graphs via Statistics-Aware Attention

Money laundering threatens financial stability and exposes institutions to penalties, motivating automated detection. Because laundering schemes often emerge through relational patterns, graph neural networks (GNNs) are increasingly used for anti-money laundering (AML). Yet AML GNNs are typically evaluated with aggregate metrics such as overall F1 score, which hide an operational issue: high-activity recipient accounts concentrate many incoming transactions, making suspicious signals harder to isolate and costlier to investigate. We introduce a recipient-degree stratified evaluation that reports standard AML metrics across recipient-context density. Across three datasets (HI-Small, HI-Medium, and AMLSim-32k-5%), it reveals consistent degradation in dense recipient contexts, which we trace to three GNN characteristics: two known limitations that AML amplifies, i.e., (1) multiset non-discriminability and (2) cardinality blindness, and (3) an attention-specific effect: in dense neighborhoods, normalized attention attenuates weak but pattern-relevant multi-hop signals. Guided by this diagnosis, we propose SALT-GNN, a lightweight statistics-aware architecture that fuses degree-aware statistical aggregation with attention at each message-passing layer, so distributional and cardinality information shapes the node states used by subsequent attention steps. Ablations support fusion placement as a key factor in dense-context performance. On HI-Small and HI-Medium, SALT-GNN uses up to 77% fewer parameters than task-specific graph-transformer baselines while improving dense-context F1 score by 3-6 points; on AMLSim-32k-5%, it improves highest-degree F1 score by 16-20 points. The gains hold for both Transformer- and GAT-style attention, indicating that the benefit comes from where statistical and attentional evidence is fused rather than from a specific attention operator.

Lidia Losavio, Francesco Sovrano, Dario Fenoglio +2

Università della Svizzera italiana (USI) Lugano, Switzerland

Graph Attention Networks Graph Neural Networks Financial Fraud Detection Anti-Money Laundering Detection Anti-Money Laundering

Jun 16, 2026

An Autonomous AI Security Agent for Banking: Multi-Vector Fraud and AML Detection Across Retail and Corporate Accounts

Banks face two threat families with fundamentally different detection requirements: signature-based fraud (card-not-present attacks, account takeover, ATM cloning) and behavioural financial crime (structuring, layering, mule networks, business email compromise). Static rule engines catch high-velocity events but remain blind to BEC payment redirection, session hijacking, and laundering layering, which are engineered to resemble legitimate activity at the individual level. This paper presents an autonomous AI security agent acting independently at low- and medium-risk tiers and escalating to a human analyst or compliance officer for high-risk and critical actions for retail and corporate banking using a three-component fusion architecture across two parallel event streams: transactions (card fraud, ACH/wire fraud, AML) and sessions (account takeover, hijacking, SIM-swap, insider abuse). Each stream combines an LSTM sequence model of per-account behaviour, a statistical velocity/threshold monitor, and a graph module capturing account-counterparty patterns (fan-in, fan-out, pass-through ratio) for laundering detection. Experiments on a synthetic log of 237,669 transactions and 113,508 sessions across 13 threat categories and 3,470 accounts show that the agent achieves an overall F1 of 0.787 (transaction) and 0.867 (session), versus 0.562/0.733 for a rule-based baseline and 0.655/0.713 for an LSTM-only baseline. The agent also incorporates a customer-facing verification chatbot (96.6% identity accuracy, 86.8% mass-reset detection) and an analyst case-summary assistant (99.3% action recommendation F1), with critical-tier response latency under 0.43 ms at the 95th percentile.

Joseph Walusimbi, Joshua Benjamin Ssentongo

Department of Electronics and Computer Engineering, Soroti University, Soroti, Uganda

Financial Fraud Detection Cybersecurity Anti-Money Laundering Detection Anti-Money Laundering

Jun 15, 2026

Beyond Defensive Reporting: Machine Learning for Active Anti-Money Laundering Control in Insurance

Money laundering through insurance claims poses a threat to insurers both through fraudulent payouts and reputational and regulatory risk. Despite this, little research has examined how such laundering can be prevented. This paper examines whether machine learning can help insurers flag suspicious claims before payout, shifting the focus from passive reporting to active prevention. Using production data from a major Norwegian insurer, we train gradient-boosted decision tree models to detect claims later reported to authorities for suspected money laundering. Because fraud and laundering may share behavioural patterns, we also examine whether insurance fraud labels can serve as an auxiliary training signal. We compare different learning setups using the Budget-Weighted Capture Rate, a metric introduced in this paper to measure how many laundering cases are captured when only a small share of claims can be manually reviewed. The results show that incorporating fraud-related investigation labels substantially improves laundering detection. The best-performing model captures nearly two-thirds of laundering cases within the top-ranked 2 to 6 percent of claims selected for investigation. To our knowledge, this is the first empirical study of machine learning for money laundering detection in insurance claims.

Dara Goldar, Geir Kjetil Ferkingstad Sandve, Martin Jullum

Fremtind Insurance · University of Oslo · Norwegian Computing Center

Financial Fraud Detection Anti-Money Laundering Detection Anti-Money Laundering

May 13, 2026

Graph-Driven Cross-Industry Real-Time Monitoring Framework for Anti-Money Laundering Detection in Converged Mobility-Energy Supply Chain Networks

With the deep integration of the travel and energy industries, cross-industry supply chain finance has gradually become a high-risk field of hidden money laundering incidents. For this reason, this work proposes a graph-driven cross-industry real-time anti-money laundering monitoring framework (GCRMF) for integrated travel - energy supply chain networks. First, a cross-industry heterogeneous graph (CIHG) covering new energy vehicle rental platforms, energy suppliers, fintech institutions, etc., is constructed, and industry semantics are integrated through temporarily Dual-GAT (Temporal Dual-Graph Attention Network), dynamically encoding capital flow paths and evolution features over time. Subsequently, in order to identify the structural fraud behavior together produced by colluding subjects, a meta-path subgraph reasoning module based on contrastive learning and hierarchical graph sampling is proposed to enhance the discrimination capability of cross-industry recurring money laundering behavior. Meanwhile, a self-supervised online learning mechanism is adopted for real-time adaptation and continuous optimization to new money laundering strategies. The experimental results show that compared with existing graph neural network methods in cross-industry scenarios, GCRMF improves the performance by more than 17.8% of F1 score and greatly reduces the false positive rate.

Rong Liu, Xiaojun Xiao, Zhanqing Su

Sol Price School of Public Policy, University of Southern California, Los Angeles, USA · Boston University, Boston, USA · Johns Hopkins University, Washington, USA

Temporal GNNs Heterogeneous GNNs Financial Fraud Detection Anti-Money Laundering Detection Anti-Money Laundering

Apr 26, 2026

Do Transaction-Level and Actor-Level AML Queues Agree? An Empirical Evaluation of Granularity Effects on the Elliptic++ Graph

Graph-based anti-money laundering (AML) systems on blockchain networks can score suspicious activity at two granularity levels -- transactions or actor addresses -- yet compliance action is conducted per actor. This paper contributes an evaluation methodology for measuring how scoring granularity affects investigation queue composition under fixed review budgets. We formalize the evaluation through a projection framework mapping transaction-level scores to the actor-level action unit via four aggregation operators, and introduce budgeted investigation metrics -- yield@budget, burden decomposition, and case fragmentation. Using the public Elliptic++ Bitcoin dataset (203,769 transactions; 822,942 address occurrences), we train independent random forest classifiers at each level under a causal temporal protocol and compare review queues through Jaccard overlap, burden decomposition, and feature-matching ablations. At one-percent budget, temporal evaluation yields mean Jaccard of 0.374 (SD 0.171); static pooled evaluation yields 0.087 (95% CI [0.079, 0.094]). An enriched address model receiving all 237 features produces even lower overlap (Jaccard=0.051), with 4.3% illicit per 100 reviews versus 30.2% for the transaction-projected queue. Address-level detection value is temporally concentrated: two timesteps exceed 91% illicit per 100 reviews while the static burden is only 3.4%. A fixed hybrid policy underperforms the best single-level queue by 5.05pp (CI [-10.2pp, -0.9pp]). These findings establish that scoring granularity is a consequential design variable for AML investigation systems -- same data, same budget, different queues, different addresses investigated.

Ankur Malik

Hudson Data, New York, NY, USA

Financial Fraud Detection Anti-Money Laundering Finance Anti-Money Laundering Detection

Apr 19, 2026

TransXion: A High-Fidelity Graph Benchmark for Realistic Anti-Money Laundering

Money laundering poses severe risks to global financial systems, driving the widespread adoption of machine learning for transaction monitoring. However, progress remains stifled by the lack of realistic benchmarks. Existing transaction-graph datasets suffer from two pervasive limitations: (i) they provide sparse node-level semantics beyond anonymized identifiers, and (ii) they rely on template-driven anomaly injection, which biases benchmarks toward static structural motifs and yields overly optimistic assessments of model robustness. We propose TransXion, a benchmark ecosystem for Anti-Money Laundering (AML) research that integrates profile-aware simulation of normal activity with stochastic, non-template synthesis of illicit subgraphs.TransXion jointly models persistent entity profiles and conditional transaction behavior, enabling evaluation of "out-of-character" anomalies where observed activity contradicts an entity's socio-economic context. The resulting dataset comprises approximately 3 million transactions among 50,000 entities, each endowed with rich demographic and behavioral attributes. Empirical analyses show that TransXion reproduces key structural properties of payment networks, including heavy-tailed activity distributions and localized subgraph structure. Across a diverse array of detection models spanning multiple algorithmic paradigms, TransXion yields substantially lower detection performance than widely used benchmarks, demonstrating increased difficulty and realism. TransXion provides a more faithful testbed for developing context-aware and robust AML detection methods. The dataset and code are publicly available at https://github.com/chaos-max/TransXion.

Keyang Chen, Mingxuan Jiang, Yongsheng Zhao +9

Fudan University · Peking University

Financial Fraud Detection Synthetic Benchmark Generation Anti-Money Laundering Synthetic Anomaly Generation Anomaly Detection Anti-Money Laundering Detection

Apr 3, 2026

Extracting Money Laundering Transactions from Quasi-Temporal Graph Representation

Money laundering presents a persistent challenge for financial institutions worldwide, while criminal organizations constantly evolve their tactics to bypass detection systems. Traditional anti-money laundering approaches mainly rely on predefined risk-based rules, leading to resource-intensive investigations and high numbers of false positive alerts. In order to restrict operational costs from exploding, while billions of transactions are being processed every day, financial institutions are investing in more sophisticated mechanisms to improve existing systems. In this paper, we present ExSTraQt (EXtract Suspicious TRAnsactions from Quasi-Temporal graph representation), an advanced supervised learning approach to detect money laundering (or suspicious) transactions in financial datasets. Our proposed framework excels in performance, when compared to the state-of-the-art AML (Anti Money Laundering) detection models. The key strengths of our framework are sheer simplicity, in terms of design and number of parameters; and scalability, in terms of the computing and memory requirements. We evaluated our framework on transaction-level detection accuracy using a real dataset; and a set of synthetic financial transaction datasets. We consistently achieve an uplift in the F1 score for most datasets, up to 1% for the real dataset; and more than 8% for one of the synthetic datasets. We also claim that our framework could seamlessly complement existing AML detection systems in banks. Our code and datasets are available at https://github.com/mhaseebtariq/exstraqt.

Haseeb Tariq, Marwan Hassani

ING Bank, Amsterdam, The Netherlands · Eindhoven University of Technology, Eindhoven, The Netherlands

Anti-Money Laundering Detection Anti-Money Laundering Financial Fraud Detection

Apr 1, 2026

Detecting Complex Money Laundering Patterns with Incremental and Distributed Graph Modeling

Money launderers take advantage of limitations in existing detection approaches by hiding their financial footprints in a deceitful manner. They manage this by replicating transaction patterns that the monitoring systems cannot easily distinguish. As a result, criminally gained assets are pushed into legitimate financial channels without drawing attention. Algorithms developed to monitor money flows often struggle with scale and complexity. The difficulty of identifying such activities is further intensified by the (persistent) inability of current solutions to control the excessive number of false positive signals produced by rigid, risk-based rules systems. We propose a framework called ReDiRect (REduce, DIstribute, and RECTify), specifically designed to overcome these challenges. The primary contribution of our work is a novel framing of this problem in an unsupervised setting; where a large transaction graph is fuzzily partitioned into smaller, manageable components to enable fast processing in a distributed manner. In addition, we define a refined evaluation metric that better captures the effectiveness of exposed money laundering patterns. Through comprehensive experimentation, we demonstrate that our framework achieves superior performance compared to existing and state-of-the-art techniques, particularly in terms of efficiency and real-world applicability. For validation, we used the real (open source) Libra dataset and the recently released synthetic datasets by IBM Watson. Our code and datasets are available at https://github.com/mhaseebtariq/redirect.

Haseeb Tariq, Alen Kaja, Marwan Hassani

ING Bank Amsterdam, The Netherlands · Eindhoven University of Technology Eindhoven, The Netherlands · Identity & Risk Intelligence Adyen Amsterdam, The Netherlands +1

Anti-Money Laundering Detection Anti-Money Laundering Financial Fraud Detection Anomaly Detection Unsupervised Anomaly Detection

Mar 24, 2026

LineMVGNN: Anti-Money Laundering with Line-Graph-Assisted Multi-View Graph Neural Networks

Anti-money laundering (AML) systems are important for protecting the global economy. However, conventional rule-based methods rely on domain knowledge, leading to suboptimal accuracy and a lack of scalability. Graph neural networks (GNNs) for digraphs (directed graphs) can be applied to transaction graphs and capture suspicious transactions or accounts. However, most spectral GNNs do not naturally support multi-dimensional edge features, lack interpretability due to edge modifications, and have limited scalability owing to their spectral nature. Conversely, most spatial methods may not capture the money flow well. Therefore, in this work, we propose LineMVGNN (Line-Graph-Assisted Multi-View Graph Neural Network), a novel spatial method that considers payment and receipt transactions. Specifically, the LineMVGNN model extends a lightweight MVGNN module, which performs two-way message passing between nodes in a transaction graph. Additionally, LineMVGNN incorporates a line graph view of the original transaction graph to enhance the propagation of transaction information. We conduct experiments on two real-world account-based transaction datasets: the Ethereum phishing transaction network dataset and a financial payment transaction dataset from one of our industry partners. The results show that our proposed method outperforms state-of-the-art methods, reflecting the effectiveness of money laundering detection with line-graph-assisted multi-view graph learning. We also discuss scalability, adversarial robustness, and regulatory considerations of our proposed method.

Chung-Hoo Poon, James Kwok, Calvin Chow +1

Logistics and Supply Chain MultiTech R&D Centre, Level 11, Cyberport 2, 100 Cyberport Road, Hong Kong · Department of Computer Science and Engineering, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong

Anti-Money Laundering Detection Financial Fraud Detection Graph Neural Networks

Mar 22, 2026

Explainable AML Triage with LLMs: Evidence Retrieval and Counterfactual Checks

Anti-money laundering (AML) transaction monitoring generates large volumes of alerts that must be rapidly triaged by investigators under strict audit and governance constraints. While large language models (LLMs) can summarize heterogeneous evidence and draft rationales, unconstrained generation is risky in regulated workflows due to hallucinations, weak provenance, and explanations that are not faithful to the underlying decision. We propose an explainable AML triage framework that treats triage as an evidence-constrained decision process. Our method combines (i) retrieval-augmented evidence bundling from policy/typology guidance, customer context, alert triggers, and transaction subgraphs, (ii) a structured LLM output contract that requires explicit citations and separates supporting from contradicting or missing evidence, and (iii) counterfactual checks that validate whether minimal, plausible perturbations lead to coherent changes in both the triage recommendation and its rationale. We evaluate on public synthetic AML benchmarks and simulators and compare against rules, tabular and graph machine-learning baselines, and LLM-only/RAG-only variants. Results show that evidence grounding substantially improves auditability and reduces numerical and policy hallucination errors, while counterfactual validation further increases decision-linked explainability and robustness, yielding the best overall triage performance (PR-AUC 0.75; Escalate F1 0.62) and strong provenance and faithfulness metrics (citation validity 0.98; evidence support 0.88; counterfactual faithfulness 0.76). These findings indicate that governed, verifiable LLM systems can provide practical decision support for AML triage without sacrificing compliance requirements for traceability and defensibility.

Dorothy Torres, Wei Cheng, Ke Hu

School of Science, Technology, Engineering and Mathematics 263 Academy Street, Room S204 Jersey City, NJ 07306 · School of Electrical Engineering and Computer Science, The Pennsylvania State University, 207 Electrical Engineering West, University Park, PA 16802, USA

Anti-Money Laundering Anti-Money Laundering Detection Faithfulness of Language Model Explanations Financial Fraud Detection Retrieval-Augmented Generation

Mar 14, 2026

DPxFin: Adaptive Differential Privacy for Anti-Money Laundering Detection via Reputation-Weighted Federated Learning

In the modern financial system, combating money laundering is a critical challenge complicated by data privacy concerns and increasingly complex fraud transaction patterns. Although federated learning (FL) is a promising problem-solving approach as it allows institutions to train their models without sharing their data, it has the drawback of being prone to privacy leakage, specifically in tabular data forms like financial data. To address this, we propose DPxFin, a novel federated framework that integrates reputation-guided adaptive differential privacy. Our approach computes client reputation by evaluating the alignment between locally trained models and the global model. Based on this reputation, we dynamically assign differential privacy noise to client updates, enhancing privacy while maintaining overall model utility. Clients with higher reputations receive lower noise to amplify their trustworthy contributions, while low-reputation clients are allocated stronger noise to mitigate risk. We validate DPxFin on the Anti-Money Laundering (AML) dataset under both IID and non-IID settings using Multi Layer Perceptron (MLP). Experimental analysis established that our approach has a more desirable trade-off between accuracy and privacy than those of traditional FL and fixed-noise Differential Privacy (DP) baselines, where performance improvements were consistent, even though on a modest scale. Moreover, DPxFin does withstand tabular data leakage attacks, proving its effectiveness under real-world financial conditions.

Renuga Kanagavelu, Manjil Nepal, Ning Peiyan +6

A*STAR IHPC Singapore · SRM University-AP Andhra Pradesh, India · EVYD Singapore

Anti-Money Laundering Detection Differentially Private Federated Learning Federated Learning Differential Privacy Financial Fraud Detection

Mar 4, 2026

Algorithmic Compliance and Regulatory Loss in Digital Assets

We study the deployment performance of machine learning based enforcement systems used in cryptocurrency anti money laundering (AML). Using forward looking and rolling evaluations on Bitcoin transaction data, we show that strong static classification metrics substantially overstate real world regulatory effectiveness. Temporal nonstationarity induces pronounced instability in cost sensitive enforcement thresholds, generating large and persistent excess regulatory losses relative to dynamically optimal benchmarks. The core failure arises from miscalibration of decision rules rather than from declining predictive accuracy per se. These findings underscore the fragility of fixed AML enforcement policies in evolving digital asset markets and motivate loss-based evaluation frameworks for regulatory oversight.

Khem Raj Bhatt, Krishna Sharma

Anti-Money Laundering Anti-Money Laundering Detection Model Calibration Concept Drift Cost-Sensitive Learning Financial Fraud Detection+1

Mar 2, 2026

Tide: A Customisable Dataset Generator for Anti-Money Laundering Research

The lack of accessible transactional data significantly hinders machine learning research for Anti-Money Laundering (AML). Privacy and legal concerns prevent the sharing of real financial data, while existing synthetic generators focus on simplistic structural patterns and neglect the temporal dynamics (timing and frequency) that characterise sophisticated laundering schemes. We present Tide, an open-source synthetic dataset generator that produces graph-based financial networks incorporating money laundering patterns defined by both structural and temporal characteristics. Tide enables reproducible, customisable dataset generation tailored to specific research needs. We release two reference datasets with varying illicit ratios (LI: 0.10%, HI: 0.19%), alongside the implementation of state-of-the-art detection models. Evaluation across these datasets reveals condition-dependent model rankings: LightGBM achieves the highest PR-AUC (78.05) in the low illicit ratio condition, while XGBoost performs best (85.12) at higher fraud prevalence. These divergent rankings demonstrate that the reference datasets can meaningfully differentiate model capabilities across operational conditions. Tide provides the research community with a configurable benchmark that exposes meaningful performance variation across model architectures, advancing the development of robust AML detection methods.

Montijn van den Beukel, Jože Martin Rožanec, Ana-Lucia Varbanescu

University of Amsterdam, The Netherlands · Jožef Stefan Institute, Slovenia · University of Amsterdam/University of Twente, The Netherlands

Anti-Money Laundering Detection Synthetic Data Generation Synthetic Benchmark Generation Anti-Money Laundering Financial Fraud Detection

Jun 4, 2025

GARG-AML against Smurfing: A Scalable and Interpretable Graph-Based Framework for Anti-Money Laundering

Money laundering, a global problem estimated to account for 2%-5% of the global GDP, required regulators to enforce stringent rules on financial institutions to combat it. One prominent laundering method, called smurfing, relies on breaking up transactions into smaller amounts to evade detection. Given the complexity of laundering schemes, involving numerous transactions across multiple parties, network analytics is an important tool for anti-money laundering. However, recent advances in network analytics have leaned heavily on black-box network embedding methods, limiting their utility in businesses. To address the specific nature of smurfing and banks' operational requirements, this paper introduces GARG-AML, a novel graph-based method that quantifies smurfing risk through a single interpretable metric derived from the structure of the second-order transaction network. Unlike traditional methods, GARG-AML provides a balance between computational efficiency and transparency, enabling integration into existing AML workflows. We demonstrate the scalability of GARG-AML on large random networks, and its performance on two open-source money laundering datasets. Our results highlight the potential of GARG-AML to enhance smurfing detection and support investigative decision-making.

Bruno Deprez, Bart Baesens, Tim Verdonck +1

KU Leuven · University of Antwerp - imec · University of Southampton

Anti-Money Laundering Anti-Money Laundering Detection Financial Fraud Detection