Intelligent Financial Fraud Detection Practices: An Investigation

Financial fraud is an issue with far reaching consequences in the finance industry, government, corporate sectors, and for ordinary consumers. Increasing dependence on new technologies such as cloud and mobile computing in recent years has compounded the problem. Traditional methods of detection involve extensive use of auditing, where a trained individual manually observes reports or transactions in an attempt to discover fraudulent behaviour. This method is not only time consuming, expensive and inaccurate, but in the age of big data it is also impractical. Not surprisingly, financial institutions have turned to automated processes using statistical and computational methods. This paper presents a comprehensive investigation on financial fraud detection practices using such data mining methods, with a particular focus on computational intelligence-based techniques. Classification of the practices based on key aspects such as detection algorithm used, fraud type investigated, and success rate have been covered. Issues and challenges associated with the current practices and potential future direction of research have also been identified.Comment: Proceedings of the 10th International Conference on Security and Privacy in Communication Networks (SecureComm 2014

Predicting deadline transgressions using event logs

Effective risk management is crucial for any organisation. One of its key steps is risk identification, but few tools exist to support this process. Here we present a method for the automatic discovery of a particular type of process-related risk, the danger of deadline transgressions or overruns, based on the analysis of event logs. We define a set of time-related process risk indicators, i.e., patterns observable in event logs that highlight the likelihood of an overrun, and then show how instances of these patterns can be identified automatically using statistical principles. To demonstrate its feasibility, the approach has been implemented as a plug-in module to the process mining framework ProM and tested using an event log from a Dutch financial institution

Investigating Identity Fraud Management Practices in E-tail sector:A Systematic Review

Purpose: Identity fraud is a growing issue for online retail organisations. The literature on this issue is scattered, and none of the studies presents a holistic view of identity fraud management practices in the online retail context. Therefore, the purpose of this paper is to investigate the identity fraud management practices and present a comprehensive set of practices for e-tail sector. Design/methodology/approach: A systematic literature review approach was adopted, and the articles were selected through pre-set inclusion criteria. The authors synthesised existing literature to investigate identity fraud management in e-tail sector. Findings: The research finds that literature on practices for identity fraud management is scattered. The findings also reveal that firms assume identity fraud issues as a technological challenge, which is one of the major reasons for a gap in effective management of identity frauds. This research suggests e-tailers to deal this issue as a management challenge and counter strategies should be developed in technological, human and organisational aspects. Research limitations/implications: This study is limited to the published sources of data. Studies, based on empirical data, will be helpful to support the argument of this study; additionally, future studies are recommended to include a wide number of databases. Practical implications: This research will help e-tail organisations to understand the whole of identity fraud management and help them develop and implement a comprehensive set of practices at each stage, for effective management identity frauds. Originality/value: This research makes unique contributions by synthesising existing literature at each stage of fraud management and encompasses social, organisational and technological aspects. It will also help academicians understanding a holistic view of available research and opens new lines for future research.</p

An Examination of E-Banking Fraud Prevention and Detection in Nigerian Banks

E-banking offers a number of advantages to financial institutions, including convenience in terms of time and money. However, criminal activities in the information age have changed the way banking operations are performed. This has made e-banking an area of interest. The growth of cybercrime – particularly hacking, identity theft, phishing, Trojans, service denial attacks and account takeover– has created several challenges for financial institutions, especially regarding how they protect their assets and prevent their customers from becoming victims of cyber fraud. These criminal activities have remained prevalent due to certain features of cyber, such as the borderless nature of the internet and the continuous growth of the computer networks. Following these identified challenges for financial institutions, this study examines e-banking fraud prevention and detection in the Nigerian banking sector; particularly the current nature, impacts, contributing factors, and prevention and detection mechanisms of e-banking fraud in Nigerian banking institutions. This study adopts mixed research methods with the aid of descriptive and inferential analysis, which comprised exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) for the quantitative data analysis, whilst thematic analysis was used for the qualitative data analysis. The theoretical framework was informed by Routine Activity Theory (RAT) and Fraud Management Lifecycle Theory (FMLT). The findings show that the factors contributing to the increase in e-banking fraud in Nigeria include ineffective banking operations, internal control issues, lack of customer awareness and bank staff training and education, inadequate infrastructure, presence of sophisticated technological tools in the hands of fraudsters, negligence of banks’ customers concerning their e-banking account devices, lack of compliance with the banking rules and regulations, and ineffective legal procedure and law enforcement. In addition, the enforcement of rules and regulations in relation to the prosecution of financial fraudsters has been passive in Nigeria. Moreover, the findings also show that the activities of each stage of fraud management lifecycle theory are interdependent and have a collective and considerable influence on combating e-banking fraud. The results of the findings confirm that routine activity theory is a real-world theoretical framework while applied to e-banking fraud. Also, from the analysis of the findings, this research offers a new model for e-banking fraud prevention and detection within the Nigerian banking sector. This new model confirms that to have perfect prevention and detection of e-banking fraud, there must be a presence of technological mechanisms, fraud monitoring, effective internal controls, customer complaints, whistle-blowing, surveillance mechanisms, staff-customer awareness and education, legal and judicial controls, institutional synergy mechanisms of in the banking systems. Finally, the findings from the analyses of this study have some significant implications; not only for academic researchers or scholars and accounting practitioners, but also for policymakers in the financial institutions and anti-fraud agencies in both the private and public sectors

THE ROLE OF TECHNOLOGY IN COMBATTING BANK FRAUDS: PERSPECTIVES AND PROSPECTS

Banks are the engines that drive the operations in the financialsector, money markets and growth of an economy. With the rapidly growingbanking industry in India, frauds in banks are also increasing very fast, andfraudsters have started using innovative methods. As part of the study, a questionnaire-basedsurvey was conducted in 2013-14 among 345 bank employees to know theirperception towards bank frauds and evaluate the factors that influence thedegree of their compliance level. This study provides a frank discussion of theattitudes, strategies and technology that specialists will need to combatfrauds in banks. In the modern era, there is “no silver bullet for fraudprotection; the double-edged sword of technology is getting sharper,day-in-day-out.” The use of neural network-based behavior models in real-timehas changed the face of fraud management all over the world. Banks that canleverage advances in technology and analytics to improve fraud prevention willreduce their fraud losses. Recently, forensic accounting has come into limelightdue to rapid increase in financial frauds or white-collar crimes