financial fraud detection teams

Abstract: Illicit account detection is a critical task for financial risk control systems, aiming to pinpoint malicious actors within transaction networks. Existing efforts typically recast transaction networks into directed multigraphs and leverage graph neural networks (GNNs) to detect anomalies via topological structures under the homophily assumption. However, directly grafting GNNs onto transaction graphs is faced with at least two pivotal challenges, i.e., structural inconsistency and label scarcity. The former arises from deceptive connections forged by malicious actors, while the latter stems from the lack of annotated data. In light of these, we introduce MINT, a novel graph neural framework that mitigates structural inconsistency via an attentive message-passing scheme on transaction graphs. Specifically, MINT introduces a discrepancy-aware feature propagation, which tracks malicious actors by quantifying deviations between nodes across bi-directional transaction flows. A transaction salience module is proposed to mitigate structural inconsistency by adaptively regularizing the interaction strength between nodes. Furthermore, to alleviate label scarcity, MINT is optimized via Positive-Unlabeled (PU) learning, which exploits only a minority of illicit nodes coupled with a majority of unlabeled ones. Extensive experiments conducted on three financial transaction benchmarks, including two large-scale public and one in-house real-world datasets, validate the superior effectiveness of MINT over several cutting-edge baselines.

Abstract: Analyzing merchant transaction histories requires dynamic temporal filtering, entity resolution, and aggregation over irregular event streams--operations poorly captured by static tabular or time-series forecasting benchmarks. We introduce TxnQA, an analytical QA benchmark comprising 27 task families (81 templates) alongside a 5-scenario fraud-risk reasoning suite that evaluates both verdicts and supporting evidence over synthetic, privacy-mitigated transaction data. Ground-truth answers are computed programmatically, and model performance is decomposed into format-following rate (FFR), conditional content accuracy (CA), and end-to-end correctness (E2E). Evaluating prompted proprietary baselines and six LoRA-adapted open-weight models shows that adaptation reliably enforces output schemas but leaves arithmetic bottlenecks: Gemma-4-31B-IT and Qwen3-8B attain E2E scores of 0.867 and 0.816, whereas evaluated MoE checkpoints reach only 0.632-0.713. Furthermore, on the 500-instance fraud suite, verdict accuracy frequently exceeds 80%, yet joint accuracy (requiring exact evidence attribution) collapses to at most ~23%. These findings identify schema compliance, semantic calculation, and evidence attribution as three distinct bottlenecks in transaction-sequence QA.

Abstract: Misclassification is a critical problem in many machine learning applications. Since even the classifier models with high accuracy (e.g., > 95%) still introduce some misclassification error, it may not be possible to rely on the output of a classifier. In this paper, we introduce trustable learning, which prompts the learning model to yield only the true output, thus avoiding misclassifications. Whenever the model cannot decide the output accurately, the learning model should indicate that there could be a misclassification error if it is forced to classify, and hence, it should reject to make a decision or defer it to a human expert. Therefore, we develop a methodology for trustable learning and apply it to artificial neural networks and show that it is possible to develop a classifier with 0% misclassification error. We propose a novel neural network architecture named WisdomNet that could provide zero prediction error by introducing an additional neuron named as conjugate neuron that would indicate whether the network is able to classify the data correctly or not. The WisdomNet architecture can be applied to any previously built model, and we have evaluated WisdomNet with several network architectures such as multilayer perceptron, convolutional neural network, and deep network on different data sets. The results show that the WisdomNet is able to reduce the classification error rate to 0%, while labeling the data is difficult to classify as `reject' at a low percentage of within around 10%.

Abstract: Reconstruction-based detectors for multivariate time series anomaly detection typically learn a single entangled representation of normal behavior and flag anomalies based on reconstruction error. However, real-world anomalies are not only isolated spikes in a single channel but also disruptions in the relationships between channels, where each sensor individually appears normal, but their joint behavior deviates from the norm. Because these models compress both temporal evolution and inter-channel structure into this single space, they lack an explicit mechanism to isolate such inter-channel dependencies from normal temporal dependencies, leading to lower detection rates for cross-channel anomalies. We propose CARMA (Correlation-Aware Reconstruction for Multivariate Time Series Anomaly Detection), which is a reconstruction-based variational autoencoder with two complementary latent spaces: a temporal latent that captures sequential dynamics, and a correlation latent that is trained to reconstruct the window's pairwise Pearson correlations. Both representations are fused in the signal decoder, and anomalies are detected from the reconstruction error. We evaluate CARMA on the TSB-AD-M benchmark suite (17 datasets, 180 series) against 29 baseline methods, and show that it significantly outperforms all of them across multiple threshold-free and range-aware metrics, achieving a VUS-PR of 0.4929. Ablations show that removing the correlation branch degrades performance, that adding a second latent without supervision recovers only part of the gain, and that supervising the correlation latent with an explicit correlation target accounts for the rest and produces a sharper error response at anomalies.

Abstract: Existing governance approaches in decentralized financial networks rely on manual review processes conducted by human committees, which introduces subjective bias, creates a scalability bottleneck under high network volume, and fails to capture complex behavioural patterns and evolving network dynamics. To address these limitations, we propose \name, a federated learning-based pairwise ranking framework in which multiple institutions collaboratively train a ranking model without sharing their private transaction data. This collaborative learning enables the model to capture network-wide behavioural patterns that signify strong network participation and directly contribute to the network effect, including diversity of counterparties, usage of multiple applications, and frequency of transactions. The proposed system ranks providers based on the authenticity of their actions, promoting genuine contributors and demoting those exhibiting suspicious behaviour. We evaluate \name\ on a real-world blockchain transaction dataset. Results demonstrate that the federated approach achieves ranking performance modestly below the centralized baseline (NDCG@15: $\approx$0.87 vs.\ $\approx$0.92) while preserving data privacy and matching its ranking stability (Kendall $τ$: $\approx$0.70 for both regimes), producing reliable governance decisions, including provider promotion and demotion (648 and 39 unique providers, respectively), without requiring centralized access to sensitive transaction data.

Abstract: Federated Large Language Models (FedLLMs) are promising to deliver privacy-preserving, collaborative intelligence. The decentralized training process is vulnerable to Byzantine attacks that corrupt semantic consistency and factual resilience through malicious model updates. This paper presents a new resilience strategy that prevents semantically corrupted knowledge from propagating during federated aggregation. A defense problem is formulated to jointly maximize global accuracy and suppress manipulated model updates, enabling trustworthy knowledge aggregation without accessing private local data. To strengthen the resilience of FedLLMs, we develop a novel Hypergraph Message Passing Graph Autoencoder (HMP-GAE) framework, where low-rank model updates are represented as nodes in a hypergraph and high-order semantic relationships among multiple agents are exploited through iterative message passing. By leveraging historical checkpoints and cross-agent relational reasoning, HMP-GAE identifies and suppresses semantically inconsistent updates while preserving knowledge alignment among agents throughout federated training. HMP-GAE is implemented using Qwen-2.5 and Llama-3.2 as pretrained FedLLM backbones and evaluated on AG News and Yahoo! Answers datasets. Compared to existing defenses, HMP-GAE improves global accuracy by $1.21$\%, reduces final-model classification semantic entropy by $44.08$\%, and lowers perplexity by $13.34$\%. HMP-GAE outperforms the GAE-based defense by improving the accuracy $1.39$\%, reducing the semantic entropy by $54.5$\%, and lowering perplexity by $35.5$\%.

Abstract: Causal AI is a branch of Artificial Intelligence which helps understand and reason about cause and effect relationships, not just patterns or correlations. Causal discovery aims to infer elements of the underlying causal structure--often represented as a directed graph--from observational and, when available, interventional data. While causal discovery is the fundamental step for moving beyond mere associations toward genuine understanding, and thus the basic building block of causal AI, it becomes intrinsically difficult when causal relations must be inferred from single observations. In such situations, standard causal discovery methods cannot be used and one has to identify causal relations from limited amount of information. This is typically the case for, e.g., sequences of events produced by different alarms which need to be analyzed on the fly to detect abnormal phenomena, which are usually rare. We show in this study that it is possible to leverage the predictive power of Large Language Models (LLMs) to infer causal relations between only two sequences of events. This approach, which is validated on both synthetic and real data, provides better results than standard causal discovery algorithms on several time series data, even though these data were converted into smaller, single observed sequences.

Abstract: The global transition to a cashless economy has placed credit cards as the key element of digital transactions, acclaimed for their easy use, speed, and acceptance in most places. However, the growing dependence on this payment method has led to an escalation of the risks associated with credit card (CC) fraud. Detecting this type of fraud is a difficult task because the patterns are constantly changing, there is a data imbalance, and it is necessary to identify the legitimate transactions and the fraud ones at the same time. This study addresses this challenge by proposing a credit card fraud detection (CCFD) framework using a data balancing technique and a deep learning (DL) model. The proposed fraud detection model is trained and evaluated by collecting the dataset called Credit Card Fraud Detection from the Kaggle repository. As the dataset is highly imbalanced, we utilized the Synthetic Minority Oversampling Technique (SMOTE)-Tomek technique to balance the dataset. Further, the balanced dataset is classified using the Heterogeneous Graph Neural Network (HGNN) model. The HGNN model represent various transactions using a heterogeneous graph architecture and by using an attention based message passing technique, it managed to consider the complex relationships, time factors, and user behavior. The integration of SMOTE-Tomek in the model further boosted its capacity to identify fraudulent transactions, while lowering the rate of false positives. The HGNN model attained a 99.97% accuracy, a 99.48% F1-score, a 99.15% precision, and a 98.97% recall. The findings indicates that this model is effective and can be applied to real-world CCFD scenarios.

Abstract: Current privacy-preserving mechanisms (PPMs) in Complex Event Processing (CEP) systems are unnecessarily restrictive, reducing the utility of data received by data consumers. This article presents a novel approach to preserve privacy in CEP systems, improving the utility of detected event patterns by dynamically adapting the noise added to an unprotected data stream. We introduce a new guarantee named pattern-level differential privacy (DP), which enables us to apply and compare the strength of PPMs at the pattern level. We propose new pattern-level PPMs yielding pattern-level DP and analyze different trust settings of these PPMs and their requirements for context knowledge in the CEP system, e.g., the deployed queries. Our evaluation is based on three datasets (two real-world, one synthetic) and shows that the proposed PPMs increase data utility while preserving the same privacy level as the state-of-the-art PPMs. We use simulations to study the performance of our proposed PPMs in various practical scenarios. Furthermore, we demonstrate that computational complexity is not an obstacle to deployment.

Abstract: Most existing graph streaming algorithms assume the ideal scenario where each edge arrives only once. Real-world graph streams, such as communication or transaction logs, often contain many repeated occurrences of the same edge. In general, the algorithms developed for the single-edge arrival case can fail when edges can arrive multiple times. Motivated by this, we study the {\em repeated-edge arrival graph streaming model} where an edge is allowed to arrive multiple times. In this work, we study the triangle counting problem in the repeated-edge arrival model: approximate the number of triangles in the underlying {\em simple graph} despite arbitrary edge repetitions. We design the first algorithms for triangle counting with optimal space complexity. In particular, we present a single-pass algorithm that computes an $(\varepsilon,δ)$-approximation of the number of triangles with optimal space complexity. We introduce {\em right-to-be-forgotten graph streaming} (RFGS) model, where a forget operation can cause all previous occurrences of an edge to disappear. We show that our single-pass algorithm can be extended to the RFGS model with optimal space complexity. Finally, we present optimal constant-pass algorithms that compute an $(\varepsilon,δ)$-approximation of the number of triangles and cliques for the repeated-edge arrival graph streams.

Abstract: Decentralized Finance (DeFi) has emerged as a rapidly growing blockchain-based financial service, where market transaction dynamics and underlying smart contract logic are intricately intertwined. This autonomous interplay, while eliminating centralized intermediaries, significantly expands the vulnerability surface of DeFi protocols to Price Manipulation Attacks (PMAs), which have already inflicted catastrophic financial losses. Despite their gravity, existing detection paradigms suffer from fundamental limitations. Transaction-centric methods lack awareness of contract execution semantics, making them prone to false positives under legitimate market volatility, while static contract analyses ignore real transaction behaviors and frequently report vulnerabilities that are infeasible to exploit in practice. We present DeFiFusion, a dual-modal PMA detection framework that closes this gap by jointly modeling transaction events and smart contract semantics within a unified pipeline. Our core insight is that PMA maliciousness emerges only from the interaction between transaction behaviors and the contract logic they exploit; neither signal suffices in isolation. Accordingly, we derive price-manipulation-aware event encoding for extracting fine-grained temporal and economic features tailored to manipulation patterns. We further introduce LLM-based contract semantic extraction to supply the execution-logic context that prior behavioral methods lack. To fuse these modalities, we propose a Dual-Modal Projection-Fusion Transformer with T5-style relative positional encoding, capturing the cyclic multi-stage execution structures that distinguish PMAs from benign market activity. Extensive experiments demonstrate that DeFiFusion consistently achieves state-of-the-art detection performance, effectively recalling 222 of the 225 PMA cases while maintaining a precision of 96.10%.