Structural entropy minimization combining graph representation for money laundering identification

Abstract

Money laundering identification (MLI) is a challenging task for financial AI research and application due to its massive transaction volume, label sparseness, and label bias. Most of the existing MLI methods focus on individual-level abnormal behavior while neglecting the community factor that money laundering is a collaborative group crime. Furthermore, the massive volume of transactions and the issue of label shifting also impede the application of supervised or semi-supervised models. To this end, this paper proposes an efficient community-oriented algorithm, namely SEGE, to identify money laundering based on structural entropy minimization (SEM) with graph embedding in an unsupervised approach. Experiments on both a private real-world money laundering network and a public synthetic dataset show that our SEGE algorithm derives prominent performance and outperforms the parameterized learning-based graph representation methods. Moreover, we find that there are pervasive sub-communities in the real-world money laundering network. Based on our local algorithm, we propose a real combat strategy against the money laundering group, in which when we have several scattered suspicious accounts in the transaction network, we are able to retrieve the whole money laundering group by the union of sub-communities with both high precision and high recall rates.