Anomaly detection in cross-country money transfer temporal networks

Abstract: This paper explores anomaly detection through temporal network analysis. Unlike many conventional methods, relying on rule-based algorithms or general machine learning approaches, our methodology leverages the evolving structure and relationships within temporal networks, that can be used to model financial transactions. Focusing on minimal changes in stable ecosystems, such as those found in large international financial institutions, our approach utilizes network centrality measures to gain insights into individual nodes. By monitoring the temporal evolution of centrality-based node rankings, our method effectively identifies abrupt shifts in the roles of specific nodes, prompting further investigation by domain experts. To demonstrate its efficacy, our methodology is applied in the Anti-Financial Crime (AFC) domain, analyzing a substantial financial dataset comprising over 80 million cross-country wire transfers. The goal is to pinpoint outliers potentially involved in malicious activities, aligning with financial regulations. This approach serves as an initial stride towards automating AFC and Anti-Money Laundering (AML) processes, providing AFC officers with a comprehensive top-down view to enhance their efforts. It overcomes many limitations of current prevalent paradigms, offering a holistic interpretation of the financial data landscape and addressing potential blindness to phenomena that cannot be effectively estimated through single-node or narrowly focused transactional approaches.