Management & Engineering 33 (2018) 1838-5745

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Management & Engineering

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Research on Internet Financial Fraud Detection Based on

Knowledge Graph
Yanru XUE ∗, Lei HUANG

School of Economic and Management, Beijing Jiaotong University, Beijing 100044, China

KEYWORDS ABSTRACT

Internet Finance, In recent years, with the development of Internet Financial, the
Internet Financial Fraud, proportion of Internet financial fraud is rising. At the same time, the
Knowledge graph, scale of fraud organization has the trend of globalization, because of
Fraud detection model which the fraud detection complexity rises, which brings new
challenges to the traditional way. Knowledge Graph Technology is a
new search engine optimization techniques of Google. It uses entities,
attributes, and connections to depict the different entities in the real
world and storage them in the database. It brings a new way to the
detection of financial fraud. This article uses the knowledge graph
techniques with mathematical models and neighborhood knowledge
to build an Internet financial fraud detection model. Firstly, it
introduces the type of Internet financial fraud and analyzed in-depth
understanding of the risks of Internet financial fraud, and finds a
breakthrough to solve fraud-identity record testing. Secondly, it depicts
the method to conduct the knowledge graph. Finally, we use the
knowledge graph to detect the likelihood of the fraud, with which the
client constitutions have a clearer grasp of the users. Therefore, it
reduces the proportion of Internet financial fraud.

© ST. PLUM-BLOSSOM PRESS PTY LTD

∗Corresponding author.
E-mail address: 16120620@bjtu.edu.cn

English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD

DOI:10.5503/J.ME.2018.33.004
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1 Introduction
With the explosive growth of Internet finance,
Internet financial fraud incidents brought huge
economic losses to the community. Financial
fraud occupies 5% of the global economy, with
annual losses of more than 2.3 trillion euros. The
proportion of Internet financial fraud has risen
year by year. At the same time, the Internet
involves the majority of the community. The
occurrence of fraud has a double impact on
social stability and the people's property. The
knowledge graph technology can deal with the
complex identification of Internet financial fraud.
Knowledge graph technology is of great
significance to the new generation of Internet
financial fraud detection technology.
2 Internet Financial Fraud
2.1 Research on Internet Finance
In recent years, with the development of the
Internet and the popularity of infrastructure,
traditional business continues to develop. 2013
was named as the first year of “Internet
development”. The Internet financial industry
has developed rapidly, China is one of the
fastest growing countries. Internet finance
includes both Internet and financial
characteristics, which was virtual, real-time
response and so on. Through the Internet,
transactions can greatly reduce the trading time
and transaction processes. At the same time, the
user's convenience was enhanced. The
transaction process requires a high degree of
security.
2.2 Internet Financial Fraud Detection
Internet financial fraud presents two major
characteristics: increased complexity and
globalization. Complexity means in order to
achieve the purpose of transactions the
fraudulent user conceal some identity
information. At the same time, the Internet
transactions formed an information island. The
evaluation of the user is not enough, the
complexity of fraud detection increases.
33
On the other hand, there are so many
differences between countries on
Internet-related policies and laws. Internet
financial fraud has brought serious economic
losses to the country and the people, and it is
very important to establish an effective fraud
identification model.
The primary issue about how to effectively
identify the Internet Financial fraud is the
perception of the risk of Internet financial fraud.
For Internet financial fraud, the risks involved in
the transaction include the following:
information asymmetry risk, moral hazard,
operational risk and liquidity risk. The risk of
information asymmetry is the primary feature.
This paper mainly solves the risk of information
asymmetry through the technology of
knowledge graph.
3 Knowledge Graph Technology
3.1 The development of knowledge graph
The development of the linking Open Data
project facilitated the development of the RDF
database and graph database. Google pointed
the concept of knowledge graph for the first
time in 2012. Half a year later, the knowledge
graph semantic network contains 57 billion
“objects”, more than 18 billion "facts" and
"relationships" used to detect the search result.
The Knowledge graph quickly gained
widespread attention.
The knowledge graph is essentially a semantic
network with a graph-based data structure
consisting of nodes and edges. In the
knowledge map, each node represents the
"entity" that exists in the real world, and each
edge is the "relationship" between the
“entities”. The knowledge graph is the most
efficient way of expressing the relationship. Each
entity or concept is identified by a globally
uniquely identified ID, each attribute-value pair
is used to characterize the intrinsic properties of
the entity, and the relationship is used to
connect two entities, depicting the association
between them. In the knowledge of the map, the
richness of the entity is rising, it varies from the
people, places, organizations, movies, music,
books, software, video games and so on. The
objective description of the real world.
Figure 1 The diagram of knowledge graph
3.2 The construction of knowledge graph
Data processing requires relying on
knowledge-related techniques. The specific
process of knowledge map includes "entity
chain", "the extraction of relationship",
"knowledge reasoning" and "knowledge
representation". In order to show the
construction of the knowledge graph, it will be
described in the way of constructing the movie
"Chinese partner" in the knowledge graph.
Figure 2 The construction of knowledge graph
The first step to build a knowledge map is the
"entity chain". How to connect each entity is the
first step to build a knowledge map. Firstly, the
information about "Chinese partners" will be
stored in the knowledge map. You can link any
information about the entity. This associated
information is the information that the users
looked for. The second step is to build the
34
relationship between different entities. The third
step in building a map is knowledge reasoning.
As we all know, there are certain social rules and
other rules in the real world. By applying these
rules to the entities, more connections between
entities can be found. The last step is
"knowledge representation". How to store and
analyze the relationship of knowledge map by
using graph database is the key to apply the
knowledge graph.
4 Internet Financial Fraud
Recognition Process Based on
Knowledge Graph
4.1 The construction of the modal
The types of entities stored in the knowledge
graph include "people", "animals", "places", etc.
When applying the knowledge graph
technology to detect fraud mostly is about the
entity type--"people". When users of the
Internet start the financial transactions, the
identity of its legitimacy, authenticity,
comprehensiveness is essential for fraud
detection. How to distinguish illegal and false
identities from knowledge is the core. In order
to make the platform user more intuitively
aware of the identity of the applicant, we will
give the identity of the application by
establishing a model. The higher the score, the
more suspicious the higher the likelihood of
fraud.
This model is mainly for the Internet financial
platform to detect. The process is the identity
records enter into the fraud detection model,
which include specific features: name, age,
home address, ID number and so on. The fraud
detection model evaluates the identity records
with the assistance of other data information
records (identity record type standards and
information, historical databases, etc.), returns
fraud scores and cause codes. The total model
of fraud detection is shown in Figure 3.
 4.2 The basic type of identity record

The first step in fraud detection is to review

and authenticate the basic information of
identity, which is shown in Table 1. In this paper,
the Internet financial platform applicant Li Ming
is illustrated on the model evaluation process.

Table 1 Information required by the Internet

Figure 3 The model of fraud detection financial application business

This model detects the identity records by Numb

Type Number Type
three modules: The basic type of identity record, er
the score associated with the historical identity 1 Li Ming 8 Beijing
record, the intimate relationship affecting the 2 man 9 199
score. The first module needs to detect the 3 32 10 Beijing
authenticity of identity record’s basic type. This 13909283039
module requires type-related standards and 4 11 6883948
4039201
information support, such as how to distinguish 5 18892039484 12 id
the phone number of the identity is valid, liming@163.c Personal
whether the mailbox is in compliance with the 6 13
oml credit report
format of the mailbox. The second module and
63302933889
the third module are supported by the historical 7 14 others
93302933
database. The second module needs to
determine the fraud score by detecting its
The basic information needs support from
graphical network model. The third module
credit agencies, public security departments, the
determines the fraud score by creating a
telecommunications sector and other basic
graphical network of this identity record and the
information department. For example, the
identity record associated with it. Finally, the
verification of identity cards and names, gender
three parts of the score to merge, conclude the
authenticity need the support of the public
final score and the corresponding reason
security department to check whether the
coding.
identity card number is valid. Besides, we also
the entity
record should judge whether the phone number is valid.
We should pay attention to the liquidity of the
information when verifying the basic
the basic type of identity
standards
record information. Last but not least. The
characteristics of information that change over
he score associated with
time.
history date the historical record

Table 2 Information required by the Internet

the intimate relationship
financial application business
history date affecting the score
Weig Weig Scor
Type Score Type
ht ht e
score 1 100 10 8 70 8
2 100 10 9 50 0
Figure 4 Internet financial fraud detection model 3 100 10 10 80 10
4 100 10 11 80 9

35
 5 80 10 12 100 10 Type score Type score
6 50 3 13 100 10 1 H 0 10 L 9

7 80 9 14 90 7 2 M 9 11 H 9

Total score 8.9766 5 H 5 12 H 8

E-mail and postal 6 M 0 13 H 7

code information is 7 H 9 14 H 8
not perfect; 8 L 4 3
reasons
Personal credit report 9 L 0 4
missing part of the Total score 68
information; Identity card number information
has been fraudulent history;
Reason
4.3 The score associated with the historical Lack of postal information;
identity record E-mail information is incomplete;

The historical database stores the data records

that have been applied. The entities, attributes
and connections of the knowledge map are
stored in the graph database. The second part
and the third part of the model are based on the
mining of the relevant models in the graph
database. The authenticity and comprehensive-
ness of the application for identity information
can be obtained by testing with historical
records.
First, we need to connect the historical
identity record associated with the type of the
current identity record and draw it from the
historical database. The current application
status records include: name, ID number, mobile
phone number, e-mail, bank card number, home
address, postal code, work unit, office phone,
personal credit report. We obtain different levels
of sub-database. These sub-databases can
reflect this identity from different dimensions.
For example, sub-databases derived from home
addresses can generally be used to describe the
identity application information from the same
family.
The threshold is expressed by H/M/L
(high/middle/low). The higher the score is, the
lower the likelihood of fraud is. The final score is
collected by the above model, and a certain
weight can be given in the specific
implementation case.
4.4 The intimate relationship affecting the
score
There are certain links between fraudulent
identities, such as workplace, IP address, bank
card transfer account, communication contact,
postal code, etc., which may expose clues. The
model is equivalent to the reality of the
community of characters, intimate relationships
mapped to the database. When a point is fraud,
the associated entity fraud is likely to become
larger, and for the case of a close relationship,
that is, a strong association of two entities, when
one fraud is retrieved, the possibility of exposure
the other community increases.
The process of calculation of Li Ming identity
record in this part is: according to Li Ming's
information retrieval with the intimate
relationship associate with it; indexing different
sub-models; the normal model and fraud model
are compared to conclude the score, ultimately
output the score of the module and the cause of
coding.
Furthermore, the case also can be brought
into a certain weight. Table 4 shows that Li
Ming’s intimate relationship impact
assessment score. Li Ming identity records are
summed up by the scores of the three modules.
The final score and reason code are shown in
Table 5.

Table 3 The score associated with the historical

identity record

36
 Table 4 Li Ming intimate relationship impact 5 Conclusion
assessment score

Type Score Type Score This paper presents a new model of identity
1 H 7 9 H 9 record detection, using knowledge graph to
5 M 9 10 L 9 detect the identity of the Internet financial
7 H 5 11 L 8 portal. The application information of different
8 M 0 platforms is stored in the graph database. The
Total score 47
specific detection process is divided into three
steps: the basic evaluation of identity record,
The information is more perfect, did
Reason historical identity record evaluation, intimate
not find their intimate relationship in
code relationship evaluation. The model is based on
the identity of fraud records.
mathematical modeling, neighborhood
knowledge, and graphics network model in the
Table 5 Li Ming intimate relationship impact
assessment score
calculation process. This model returns the score
of the identity record and the reason code to the
Total transaction portal. The business personnel has
8.9766/14
score more accurate judge the applicant's fraud
E-mail and postal code possibility to reduce the fraud as soon as
Part one
Reason information is not perfect; possible.
code Personal credit report missing In the future research, we can integrate the
part of the information; calculation process of each module into the xml
Total to realize the automation. At the same time, we
68/120
score can compare the normal model and the fraud
Identity card number model in the knowledge map. Knowledge graph
information has been technology can also be applied to more identity
Part two
Reason fraudulent history; applications, the more increase of the major
code Lack of postal information; portals sharing information, the quicker they
E-mail information is build the knowledge map, which reduce the
incomplete; occurrence of fraud.
Total
47/70
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