Objectives

New technologies for anti-money laundering and combating the financing of terrorism are
key priorities in the UK Government’s Economic Crime Plan. HoweverHowever, the
complexity of trans-actional behaviour by money-laundering networks and strategies to
evade detection make it increasingly challenging for financial services to identify and
intercept money-laundering transactions as new technologies emerge. In order to provide
decision-makers in the financial system with more accurate and intuitive reporting of money
laundering and other fraudulent financial activities. This project will develop and test new
approaches for Anti-Money-Laundering (AML) by drawing on techniques from Social
Networking Analysis, Data Science, Data Visualisation and Machine Learning to develop
and test a reliable method for identifying money-laundering transactions.
To achieve this overall aim, we will pursue three key objectives (aligned to four separate
work packages):

O1: Identity and highlights the relationships between the characters involved in
money laundering. Among these are the individuals or organisations involved with money
laundering, relationships between different money launderers, between money launderers
and transactions, and present those relationships using data visualisation. [WP1, WP2]
O2: Improving the timeliness and accuracy of the money laundering detection system.
Enable accurate and efficient real-time money laundering detection through visualising
transaction networks and classification using social network analysis and machine learning
algorithms. [WP3]
O3: Marking the tracing and prediction of money laundering activities is more intuitive
for decision-makers. Provide decision-makers in the financial system with fast and
accurate decisions based on visualised information and predictive modelling such that fraud
can be detected as quickly as possible and analysis can be performed easily. [WP4]

The main outcome envisaged from this project will be the development and testing of models
and algorithms which will inform the development of a prototype real-time detection system
for financial services companies. In this project, four work packages will be designed, three
key objectives will be completed, and one main outcome will be obtained. Furthermore, the
project combines Social Network Analysis, Machine Learning and Data Visualisation
techniques within a traditional money laundering monitoring system. Make detection results
available to decision-makers through visual information and predictive models. Contribute to
making clear and effective decisions for financial decision-makers. More specifically, this
system will be designed to effectively combat money laundering and other fraudulent
financial activities.

Summary

The aim of this project is to develop new knowledge to explore how data science/analytics
can be developed to inform anti-money laundering operations. It is estimated that between
$800 billion - $2 trillion is laundered yearly, accounting for 2 – 5% of the global GDP. In the
modern age, money laundering is becoming more widespread due to the emergence of
virtual currencies or cryptocurrencies.
In July 2019, the UK Government published its Economic Crime Plan, setting out a series of
'priority actions' for 2019-2022, identifying economic crime, including money laundering, as a
national security threat for the first time. Due to the size and complexity of the financial and
property markets, anti-money laundering (AML) and combating the financing of terrorism
(CTF) are priority areas for mitigating financial risk in the UK. is of significant importance to
mitigate risk to the UK. One reason for this risk is the inadequacy of the current AML
systems and controls. Failures in systems and controls provide an invisible and illegal cover
for criminals and criminal activity that affects not only the UK society as a whole but also
abroadeconomy and society as well as negatively impacting international financial
transactions and can erode confidence in the UK financial system.
"Virtual currencies" refer to a digital representation of value that is issued or guaranteed by a
central bank or a public authority, is not necessarily attached to a legally established
currency and does not possess a legal status of currency or money but is accepted by
natural or legal persons as a means of exchange and which can be transferred, stored, and
traded electronically. When compared to traditional currencies, virtual currencies are not
regulated by any central authorities. Because of this, virtual currency networks have recently
become a hotbed for money laundering and other fraudulent financial activity. As most
currently used AML systems focus more on monitoring traditional currency transactions, we
realise the need to improve upon these systems to implement robust measures against
virtual financial fraud.
Since the current AML systems are becoming outdated and inadequate, there is a need to
propose a modern solution that can tackle this problem by:
1. 1. identifying individuals or groups involved in suspicious money laundering activities
and the relationships between them;
2. 2. analysing the relationships of these individuals and groups using social network
analysis and machine learning modelling;
3. 3. providing a platform for purposeful and efficient real-time fraud detection, risk
prediction, analysis, and visualisation tools for the relevant decision-makers and
authorities to act swiftly in accordance with the ESPRC’s “data-enabled decision
making” ICT theme.

Through the pursuit of these objectives, our research will inform the development of a new
prototype system for real-time detection of money-laundering transactions, co-produced with
project partners from the financial services sector.
The opportunities outlined above are being developed for a proposal to the Engineering and
Physical Sciences Research Council (EPSRC) call for projects on ‘Enabling human-centred
decision making through data visualisation.’
To achieve our research objectives, we will develop smart algorithms based on social
network analysis and machine learning algorithms and propose the following four work
packages (WPs).

Academic Beneficiaries
We anticipate the proposed research will benefit a wide, cross-discipline academic space,
which includes Computer Science, Business & Management, Finance, Cybersecurity, Law
and Law Enforcement. There are three levels of academic benefits: (1) advancement of
techniques and knowledge, (2) dissemination of new methodologies, and (3) creation and
contribution of data sets.
From a Computer Science perspective, our contributions are of immediate benefit by
applying and developing novel algorithms to analyse and extract insights from data in small
and large volumes. This includes academics in the areas of AI/ML and software engineering.
We develop smart algorithms to address ongoing issues in money laundering and provides
accurate analysis.
Cybersecurity researchers will benefit in several directions. First, we will contribute novel
forms of analysing data to extract patterns towards the identification of new adversarial
Tactics, Techniques and Procedures (TTPs), a key concept in Operational Cybersecurity.
Second, we expect our project to be of particular interest by noting that large-scale attacks
(e.g., ransomware) are now motivated and enabled by cryptocurrencies. We expect our
project to decidedly contribute to deterrence techniques by offering quicker and easier
identification of activity post-attack identification. To this end, novel techniques will be of
interest to the Open-Source Intelligence (OSINT) communities, which focus on analysing
public or semi-public data to gain insights to, for example, trace the activity of a criminal.
Fourth, and in continuation of the latter, we note that Digital Forensics (of which Law
Enforcement are primary users) has now decoupled from simple device analysis and have
now the difficult task of obtaining evidence using a much wider space such as the flows of
cryptocurrency.
A key direct beneficiary will be Law and Criminology, particularly researchers involved in Anti
Money Laundering (AML) and Counter-Terrorism Financing (CTF), and, in general, those
researching the phenomenon of financial crime and money flows. This includes novel forms
of money laundering such as cryptocurrencies and decentralised finance. We anticipate our
work to contribute to new policy informed by research, such as the potential alignment with
the recent EU cryptocurrency AML legislation.
From a Business, Management, and Economics, perspective, we anticipate our work will be
of interest to, directly, the area of Compliance (particularly financial) by contributing
techniques to expedite checks and standards. Research in Economics will benefit by having
available new forms of understanding of money flow, including cryptocurrencies.
Across all disciplines, we anticipate the project to raise and disseminate the power of Data
Analytics and Social Network Analysis as a powerful methodology by tackling what is
essentially a social/financial sciences problem (illicit money flows). Our project will, therefore,
directly contribute a strong use case to other disciplines such as Sociology of Psychology.
Finally, the wider research community will have new or pre-processed datasets we will index
and make openly available.
The project outputs will be disseminated to key academic and industry-related audiences
through publication in high-impact journals and conferences, as well as widely-readwidely
read technical magazines such as Communications of the ACM, IEEE Spectrum, or The
Conversation.