Research Article
Special Issue
Machine Learning For Money Laundering
Detection In The Block chain Financial
Transaction System
Slobodan Jovicic, Dr. Qing Tan
Athabasca University, Canada
dan.jovicic@gmail.com
qingt@athabascau.ca
Published online: 5 March 2018
Abstract—Blockchain technology implements the public- private
key architecture to achieve trust and security as identification of
parties involved in the electronic fund transfer is based on
private key encryption; in this sense, privacy is absent in the
blockchain paradigm as every node in the peer-to-peer network
is notified of committed electronic fund transfers and is able to
read the details of the transaction. Financial institutions will need
to revise money laundering detection practices to satisfy
operational changes with the move away from the SWIFT
network to the blockchain peer-to-peer network. The efficiency of
the blockchain model will introduce transactional efficiencies that
speed up the electronic fund transfer process. Financial
institutions will need to implement advanced money laundering
detection mechanisms that will be facilitated with the use of
machine learning. This paper examines techniques for the
application of blockchain technology to electronic fund transfers
and the machine learning approaches to detect money laundering.
I. INTRODUCTION
A. Money laundering, past and present
The perpetration of financial fraud has been evolving in
parallel with the innovation in the field of finance. Whereas
early types of financial fraud consisted of theft or creation of
fake coinage to represent the value of official gold or silver
coinage, more recent types have been manifested as
legitimizations of moneys that originated from income of
criminal activity and circumventions of payments for taxes and
duties. The adoption of computing technologies by the financial
services industry caused money laundering practices to follow
suit. Adoptions of cybersecurity policies by Financial
Institutions (FI) that focus on malware and phishing scam
detection could only partially achieve the prevention of
financial fraud [1]. The practice of money laundering is a form
of financial fraud that is considered to be the use (or, the hiding
of the source) of revenue that originates from criminal or illegal
activity [2]. An additional layer of money laundering detection
is needed to supplement cybersecurity policies to achieve
financial fraud prevention. Anti-money laundering laws that
aim to curb money laundering practices are based on the
recording of movement of moneys through electronic money
Slobodan Jovicic is a graduate student with the School of Computing and
Information Systems at Athabasca University, and his e-mail is:
dan.jovicic@gmail.com.
doi: http://dx.doi.org/10.4314/jfas.v10i4s.123
J Fundam Appl Sci. 2018, 10(4S), 376-381
settlements. The guideline on money laundering prevention that
is published by the international Financial Action Task Force
stipulates that money movements that exceed $10,000 as single
or multiple transactions are to be suspected of money laundering
and should be reported to a Financial Intelligence Unit (FIU) of
the country where transactions occurred [3]. Developed
countries have adopted guidelines on combating money
laundering that are published by the Financial Action Task
Force (on Money Laundering) (FATF), an intergovernmental
agency that was established to define anti-money laundering
standards. Financial services organizations that are operating in
countries where FATF guidelines were implemented are then
obligated by law to implement procedures for the detection of
suspicious financial transactions, and to have those transactions
reported to their respective countries’ FIUs.
The industry standard for international electronic money
movement is a set of ISO standards that was introduced by the
Society of Worldwide Interbank Financial Transactions
(SWIFT) starting with its establishment in 1973 in Brussels.
Financial services organizations sign on to SWIFT membership
to perform electronic money transfers amongst themselves.
More concretely, SWIFT is a non-profit operator of a network
for secure exchange of electronic messages that facilitates
money settlements among members [4]. The adoption of
SWIFT as the standard for electronic fund transfer (EFT) in 200
countries around the globe has resulted in it being the de facto
global platform for money movement. Two issues arise from
this state. First is political, where the fact that SWIFT is a
singular entity residing in the Western political sphere then it
could be used as a tool to exercise political will on
uncooperating countries or organization through forceful
embargoes on SWIFT membership. The second is operational
efficiency where transactional fees charged to members by
SWIFT to cover its operational cost may be considered costly
by members and, therefore, create an opportunity for a
replacement EFT method to be sought by those members that
are interested in cost reduction. Considering the two concerns
that exist with SWIFT, it is plausible to expect that either
financial services organizations seeking lower operational cost
Qing Tan is an associate professor with the School of Computing and
Information Systems at Athabasca University, and his e-mail is
qingt@athabascau.ca
376
 or foreign governments seeking independence in an EFT system
will invest resources into an evolving and competing
technology. It has been suggested that blockchain technology
could meet these requirements due to its ability to achieve
transactional transparency over a peer-to-peer network where
all nodes play equal roles without a need for intermediaries [5].
The establishment of the SWIFT infrastructure inhibited the
ability of criminals to launder money as the facilitation of EFTs
leaves an electronic trail that could be followed to establish a
pattern. In the event that the international financial services
community adopts blockchain as the basis for a new platform
for EFTs then an evaluation of the technology as it relates to
anti-money laundering detection practices will be of value to
global financial services organizations as means to identify
suspicious transactions that are reportable to FIUs. The purpose
of this research is to identify methods for the identification of
transactions suspicious of money laundering in the blockchain
transactional system.
B. Research objectives, methodology and limitations
This research examines security properties of blockchain
technology as it applies to the execution of financial
transactions in a trusted peer-to-peer network. The results of the
examination will be evaluated to determine practices for the
prevention of money laundering that meet legal obligations for
financial services organizations. Large volumes of electronic
money transfers executed by financial services organizations
cause human analysis of such transactions for the purposes of
identification of suspicious transactions to be impractical. The
automation of the identification of suspicious transactions
through the application of machine learning is essential.
Therefore, the objective of this research is to assess to what
degree compliance to anti-money laundering laws in a trusted
peer-to-peer network blockchain architecture for EFTs requires
usage of machine learning. The research is based on review of
peer reviewed material published in academic journals with
high impact factors, books and related materials published by
subject matter experts, dictionaries for word definitions, and
related resources published on the internet. Research topics
relate to blockchain technology as it applies to the execution of
EFTs for the financial services industry, anti-money laundering
legislation, and machine learning for pattern recognition of
transactions suspected of money laundering. Application of
blockchain technology is not limited to the financial services
industry, but this research will be limited to the application of
blockchain technology to the financial services industry.
Executions of EFTs using blockchain technology that may be
subjected to types of criminal activity not classified as money
laundering will be excluded from this research. The research
will be limited to literature review and an evaluation of a
conceptual model of an application of blockchain technology in
a trusted peer-to-peer network for the purposes of EFT
facilitation.
Next sections of this paper will include literature review, an
evaluation of a conceptual model and a discussion of the
findings.
J Fundam Appl Sci. 2018, 10(4S), 376-381
II. REVIEW OF RELATED LITERATURE
A. Electronic Fund Transfer
The foundation of commerce is trust; business entities need
to establish trust amongst themselves in order to exchange
goods or services for money. To streamline the means of
establishing trust in business, human social development had
introduced enforceable laws expressed as written contracts [6].
Enforceable laws are a substitute for trust when it is either
impractical or insufficient to establish interpersonal
relationships to achieve trust. The advent of computing
technologies has introduced computer automation in everyday
applications. Payment automation allows for execution of EFTs
that enable businesses and customers to exchange money for
goods and services. Every payment, or EFT, is a contract
between two parties; the contract is facilitated as money
settlement by one or more FI. Payment automation is made
possible by computing technologies that are based on
enforceable laws that create trust between the entities such as
businesses and customers. FIs are dependent on instituting trust
and computing technologies to achieve the prevention of
financial fraud in EFTs for clients. Technology brings about
efficiency to EFTs as membership to the SWIFT network allows
FIs to securely exchange messages that contain instructions on
money movement to banks’ clearinghouses [7]. FIs delegate the
establishment of trust with partnering FIs by subscribing for
membership to the SWIFT network. With over 8,000 members
and presence in over 200 countries [4], the SWIFT network
makes it practical for FIs to utilize the network to meet clients’
needs for money movement yet to not be concerned about the
legitimacy of money movement instructions that are delivered
by the SWIFT network. An interdependence on trust in the
SWIFT network for FIs ensures the legitimacy money
movement instructions. Additional means of achieving
trustworthiness are the abilities of FIs’ to maintain proper
accounting ledgers as the prosperity and creditworthiness of
businesses is directly related to the reliability of its accounts [8].
What follows is that the execution of EFTs for FIs is contingent
on maintenance of accounting ledgers that exist outside of the
bounds of the SWIFT network as it does not manage accounts
on behalf of members [4]. Then, FIs have three dependencies
for EFT. First, they are required to sign on with SWIFT for
membership as it is the de facto financial industry standard for
EFTs. Second, FIs must perform due diligence on clients and
maintain accounting ledgers to maintain trustworthiness with
the objective to prevent financial fraud. Third, the state of the
industry necessitates for the existence of FI clearinghouses to
facilitate money movement based on instructions obtained from
messages that originate from SWIFT participants. The
administration overhead that exists may influence FIs to seek
alternative technology solutions that would yield cost reduction.
B. Blockchain technology
Blockchain is a potentially transformational technology for
the financial services industry. It has been described so as it
addresses trust, fraud and error concerns due to its design for
identity check, transaction authentication, transaction accuracy
and reliability [9]. Blockchain is a technology that is akin to a
database as it represents a sequence of data blocks but exists in
a peer-to-peer network so that the data does not need to reside
on any single computer. Each block of data is linked together
377
 into a distributed ledger system that allows tamper-proof history
to be recorded such that the distributed ledger acts as a public
notary of historical events [10]. Trust in blockchain technology
is achieved by implementing a public key infrastructure such
that each data part that comprises a block represents information
that is encrypted with the private key of the entity that is adding
the data part to the block. This design allows blockchain peers
to decrypt data that is stored in blocks by using that entity’s
public key and in the process to authenticate the data that has
been added to the blockchain. Trust is inherent in the design of
blockchain as safekeeping of an entity’s private key is
fundamental to the verification of that entity’s identity.
Cryptography in computing has advanced to a point that
requires a million years of computing for a supercomputer to
crack an encryption [11]. Applications of modern encryption
algorithms to blockchain architecture cause preventions of
private key forgeries as the process is deemed to be
computationally prohibitive, consequently ensuring that trust in
data integrity is maintained across the peer-to-peer network.
The architecture of blockchain technology allows for the
embedding of metadata to the encrypted block of data. The
ability to transport metadata with a high degree of confidence is
a potentially good fit for the financial services industry as
replacement technology for clearinghouses. Blockchain
technology does away with the traditional clearinghouse model
that requires each FI to maintain its own set of books that must
be reconciled with peers’ books through a costly and slow
operation that is difficult to automate [12]. The blockchain
design incorporates a broadcast of data block changes across the
peer-to-peer network to achieve synchronization of ledgers
among the nodes [13]. The term ledger in the blockchain context
is used to describe the blockchain itself as it represents the
chronological database of transactions that is recorded by
networked computers [14]. The implementation of blockchain
technology to financial services industry attains clearinghouse
automation and ensures reconciliation of books for FIs. The
operational efficiency of blockchain within the peer-to-peer
network is not dependent on any particular technology or scale
of participation. The transactional efficiency has been
demonstrated with the rise of the Bitcoin cryptocurrency whose
low transaction fees make it appealing as an alternative to fiat
currency [15]. The Bitcoin cryptocurrency operates in a public
peer-to-peer network where any node on the network could
apply changes to the ledger. The public network makes Bitcoin
susceptible to operational disruption and damage to reputation
as malicious persons have equal access to the blockchain as
legitimate persons; indeed, eighteen out of forty public Bitcoin
exchanges where shut down due to attacks by hackers [16]. The
blocking of public access to a peer-to-peer network that is
dedicated to FIs would considerably reduce the risk of hacking.
Operational cost could be reduced further in a private peer-to-
peer network as fewer transactions would need to be broadcast
across the network to fewer nodes on the network thus making
the operation faster [17]. A private peer-to-peer network has an
added benefit of enabling participating nodes to agree on a
unique set of rules for the governing of applications, service
providers, data and users to achieve an additional layer of trust
[18]. Blockchain design characteristics that maintain privacy
and deliver metadata in a trusted peer-to-peer network enable it
to represent contracts on which financial instructions could
J Fundam Appl Sci. 2018, 10(4S), 376-381
depend for money movement; this ability, in fact, is the
manifestation of a concept named smart contracts, or
technology that enables the carrying out of computation on a
network (i.e. payment that is conditional on the state of some
internal or external variables) [14]. The blockchain metadata
could be employed to contain money movement instructions
that are equal to those that are communicated over the SWIFT
network.
C. Money laundering and blockchain
Governments may choose to adopt risk-based
recommendations on combating Anti-Money Laundering
(AML) and Counter Financing of Terrorism (CFT) that are
defined by FATF [3]. The recommendations are not explicit
instructions on the means of formulating laws, instead countries
are guided to define internal laws for each of the forty
recommended concerns. FATF recommends creating FIUs to
serve as national centers for the receipt and analysis of
suspicious transaction reports and related information that is
indicative of money laundering activities [3]. Data that is
accumulated by FIUs is composed of transactions that are
suspected of money laundering; suspicious transactions are
EFTs that exceed $10,000 in value and are executed as single or
multiple transactions within a 24-hour period. Then, FIs are
required to maintain internal processes and client records that
are necessary to meet local FIU reporting obligations. Identity
is inherent in the blockchain ledger as each data block is
encrypted with an entity’s private key. Blockchain architecture
lacks transactional privacy as changes to the blockchain are
communicated to all nodes in the peer-to-peer network, and are
by default public [19]. Privacy could be partially achieved by
providing relationship anonymity with the use of anonymization
tools that perform block mixing such that resulting transactions
that are added to the blockchain have anonymized senders of
those transactions [20]. Full anonymity could be achieved given
that public-private key pairs can be generated by anyone with a
computer and identity associated to those key pairs could be
falsified. Furthermore, due to the ease with which it is possible
to create public-private key pairs it has been suggested as good
practice to create new sets of keys for every transaction to
achieve anonymity [21]. However, public-private key pairs that
are embedded in X.509 certificates and generated by trusted
Certificate Authorities (CA) represent authentic identities as
CAs must apply rigor to due diligence on clients by collecting
and verifying personal information to issue certificates [22].
Thus, achieving anti-money laundering objectives for FIs is
made easier using blockchain provided that public-private key
pairs used to encrypt blocks of data are issued by CAs and that
the blockchain network operates as a trusted peer-to-peer
network where only those blocks that meet the strict encryption
rules are permitted.
D. Money laundering detection with machine learning
Analysis of blockchain transactions for money laundering
detection requires the use of computing technologies to
facilitate data block decryptions and to process large volumes
of decrypted transactions that make human analysis impractical.
Data blocks contain metadata that represent financial contracts
for the execution of money movement; senders are
authenticated with the use of senders’ public keys to decrypt
data blocks while receivers’ information and money movement
378
 details are extracted from metadata. In the traditional bank
clearinghouse realm, algorithmic analysis based on structural
similarity can be used to detect money laundering when
intermediary accounts are used to transfer large sums of money
from the sender to the receiver [23]. Historical financial
transaction obfuscation that could be achieved with blockchain
architecture may make algorithmic analysis based on structural
similarity not applicable to money laundering detection as the
relationship between senders and receivers gets obscured when
financial transactions are mixed [20]. Partial deanonymization
of blockchain transactions in a public peer-to-peer network
could be attained with a technique that analyses IP addresses of
transactions sources that update the blockchain [24].
Anonymization that could be achieved with the hiding of source
IPs using Tor (the onion network that hides users’ IP addresses)
has been described as not secure due to the potential man-in-the
middle attack [25]. However, deanonymization would not be
achieved by this technique in a trusted peer-to-peer network as
source IP addresses would be traced to FIs rather than third
parties. Illegitimate FIs, malicious individuals, or FIs that reside
in countries with strict privacy laws may perform transaction
mixing to contribute to acts indicative of money laundering by
achieving historical transaction obfuscation prior to adding
transactions to the blockchain. An unsupervised learning
technique using k-means cluster analysis appeared to have
identified individuals that were suspected of conducting money
laundering using the transaction mixing technique [26]. This
unsupervised learning technique identified strange behavior
where money transferred from one account to another was
accomplished using intermediary accounts. Link analysis,
another type of machine learning, was used to identify
similarities in group behaviors of financial transactions in a
traditional interbank money movement system and was based
on guilt-by-association grouping that led researchers to money
laundering detection [27]. The ability for third parties to hold
inventories of public-private keys for employment in money
laundering may make supervised link analysis a better fit for
money laundering detection than unsupervised cluster analysis.
The unsupervised cluster analysis technique for money
laundering detection is a good fit if rules exist that constrain the
ability of third parties to hold large inventories of public-private
keys.
III. MACHINE LEARNING FOR MONEY LAUNDERING
DETECTION IN THE BLOCKCHAIN F INANCIAL TRANSACTION
SYSTEM
A. Trusted peer-to-peer network conceptual model
The application of blockchain technology to the financial
services industry addresses concerns of trust, financial fraud and
errors, while at the same time achieves cost reduction for FIs by
introducing efficiencies to interbank EFT operations. The
inherent ability of blockchain technology to contain metadata
enables it for application to the execution of EFTs. The
conceptual model of the application of blockchain technology
in a trusted peer-to-peer network is rooted in the idea that each
block in the blockchain represents a collection of money
movement contracts. The metadata that would be embedded in
a data block would contain money movement instructions such
J Fundam Appl Sci. 2018, 10(4S), 376-381
as senders’ account numbers indicating where money would
originate, receivers’ account numbers where money movement
would terminate, supporting details of transactions such as
amounts, currency types, exchange rates and transaction fees,
and one nonce per contract to ensure that each financial
transaction is executed only once.
Contracts contained in blocks are encrypted with the FIs’
clients’ private keys in lieu of clients’ signatures for the
authorization of money movement and for authentication of
money movement instructions by partner FIs (that is achieved
with decryption of data blocks using clients’ public keys).
Public key certificates that have been issued by FIs as trusted
signers would accompany each contract to endorse financial
transactions. The establishment of a private peer-to-peer
network for the operation of blockchain technology would
allow FIs to apply rules that enable it to be a trusted peer-to-peer
network; standardized governance over FIs’ internal controls
and comprehensive cybersecurity policies would be fitting for a
FI to be classified as trusted. Each node, or FI, on the network
would apply rigor to client due diligence as laid out in law and
outlined in the FATF guideline. Consequently, every node
would play the role of a CA to issue their clients sets of public-
private keys to get applied when executing financial
transactions on the trusted peer-to-peer network. The proposed
architecture would, therefore, impart authenticity to contracts
that are embedded into blocks on the blockchain and would
assure network peers that execution of payment instructions that
are embedded into blocks is binding. Transactions that are
added to the blockchain are imprinted permanently as historical
records of transactions that are shared by peers on the network.
The operational efficiency of the blockchain technology comes
at a cost of privacy as access to the blockchain by third parties
would allow them the ability to learn about historical money
movements of FIs’ clients. The trusted peer-to-peer network
model, however, safeguards against such exposure by limiting
access to the network only to verifiable FIs.
B. Anonymization in trusted peer-to-peer networks
FIs are obligated to perform money laundering detection on
financial transactions and report suspicious transactions to
FIUs. As blockchain is a record of historical transactions then it
makes for streamlined tracing of money movements as
interbank reconciliation of ledgers is not required. Financial
transaction details that are embedded in the metadata of data
blocks contain information that can be analyzed by FIs to
identify suspicious transactions. The trusted peer-to-peer
network assures that anonymity is not present in the execution
of financial transactions. This is because deanonymization
techniques based on IP hiding would not be applicable since
trusted peer-to-peer network rules would be crafted so as to
permit only specific IP ranges to change the blockchain. The
technique of creating multiples of fake public-private keys for
use as intermediaries in money movement would not be allowed
as such key pairs would not have been issued by CAs.
C. Computer assisted money laundering detection
The large volume of financial transactions necessitates use
of computing technologies for the purposes of identification of
financial transactions that are suspected of money laundering.
Basic querying of data and algorithmic analysis based on
379
 structural similarity of blocks in the blockchain would produce
sets of financial transactions that have been identified to have
transacted amounts that are above the $10,000 threshold and
that would be reportable to FIUs. However, criminals that are
intent on money laundering may resort to tactics that require FIs
to apply more comprehensive analysis to financial transactions.
Machine learning assisted analysis would contribute to further
identification of financial transactions that are suspected of
money laundering. Money laundering performed using the
transaction mixing technique would be identifiable with an
unsupervised machine learning method using k-means cluster
analysis. This method may yield greater accuracy over its
application in a traditional financial transaction system as
identification parameters in the blockchain transaction system
are not limited to account numbers but contain certificates that
can be used to authenticate transactions across the blockchain.
Criminals intent on laundering money may need to resort to
tactics where multiple sets of accounts are employed to transfer
money without intermixing transfers across those account sets;
this practice would be indicative of a criminal group that is
attempting to launder money in smaller amounts across larger
sets of accounts to achieve a greater success rate (i.e. some but
not all money laundering attempts get identified and funds
seized). The supervised machine learning method utilizing link
analysis would be able identify guilt-by-association groupings
of account sets to achieve money laundering detection. The
inability for criminals to create own public-private key pairs
increases the chances of money laundering detection of account
groups as criminals would have at their disposal few authentic
public-private key pairs with which to conduct illegitimate
operation. Likewise, any public-private key pair that is owned
by criminals and is authentic, in that it was issued by CAs and
has not yet been associated with criminal behavior, would be
valuable to criminals. The conflating of the supervised and
unsupervised machine learning methods for money laundering
detection in a trusted peer-to-peer blockchain financial
transaction system would enable FIs to identify suspicious
transactions with a high degree of confidence. Furthermore, the
historical record of financial transactions available in the
blockchain and shared across the peer-to-peer network would
enable FIUs to either supplement or completely replace money
laundering detection that is performed by FIs; since FIUs and
FIs would have access to same sets of historical records of
financial transactions and identities. This change would
represent a fundamental shift in the role of FIUs in the financial
sector, but it would nonetheless be positive as it would achieve
cost reduction for FIs and likely achieve greater success rate at
money laundering detection as FIs are not required to meet
certain money laundering detection benchmarks and their
money laundering detection practices vary as a result.
IV. ISSUES, CHALLENGES AND TRENDS
A. Confidence in cryptography
The foundation of blockchain architecture is cryptography as
it assures confidence in the integrity of transactions and the
metadata that is embedded into every transaction that contains
money movement instructions. The asymmetric cryptography
of the public-private key architecture is such that it is
J Fundam Appl Sci. 2018, 10(4S), 376-381
computationally difficult to crack the private key thus making it
a good fit for implementation to the encryption of blockchain
transactions. Quantum computing research may produce
machines capable of cracking transistor based cryptography in
short amount of time thus requiring rapid transition quantum
based cryptography [28]. There may be a period of transition in
cryptography when blockchain transactions may be susceptible
to fraud as imitation of public-private key pairs could cause
criminals to submit fraudulent transactions to the blockchain.
Money laundering could be achieved by hijacking legitimate
private keys from FIs’ unsuspecting clients, and using those
private keys to conduct money movement. This is a potential
area of research into machine learning assisted analysis of
money laundering detection. FIs should be cognizant of the
developing quantum computing technology and prepare a
transition plan for adoption of quantum based cryptography.
B. Blockchain transaction malleability
The Bitcoin implementation of the blockchain architecture
contains a technical flaw known as transaction malleability. The
standard operating procedure of the Bitcoin environment is for
transactions that are submitted to the blockchain to get adopted
after a certain period when multiple transactions get bulked
together into a new block that gets added to the blockchain. It is
during this delayed period of processing that can be exploited as
a weakness. To facilitate the fraud a malicious person begins by
submitting a legitimate transaction to transfer funds from their
Bitcoin exchange owned account to another owned account but
then submits a replica of the transaction with a different
signature knowing that only one transaction will get added to
the blockchain, and should the replica get added the person can
claim a refund from the Bitcoin exchange and in effect defraud
the exchange [29]. The funds obtained through the practice are
laundered moneys. The trusted peer-to-peer network is
protected from this attack in two ways. The first is that only
authorized nodes are permitted to change the blockchain thus
preventing third parties to add changes to the blockchain
(although compromised nodes on the network could be
commandeered for malicious purpose). The second is that the
Bitcoin model where public peer-to-peer nodes vote on
adoption of transactions to blocks is absent in a proposed model
as trusted nodes contain cybersecurity measures to validate
client requests, similar to the model that presently exist for the
traditional SWIFT financial transaction system.
C. Absence of privacy
Trusted and public peer-to-peer networks for blockchain
architecture hold shared properties such that both achieve trust
at the expense of privacy. These properties are both benefits and
barriers for adoption of blockchain technology in the financial
services industry as no uniformity on privacy exists among
various jurisdictions around the world [30]. The adoption of a
trusted peer-to-peer network for the blockchain financial
transaction system by global FIs would expose their clients’
EFT activity to all nodes as all changes are broadcast across the
380
 network to synchronize transaction ledgers. This concern could
be addressed with an implementation of interconnected regional
trusted peer-to-peer networks where cross border money
movements would be accomplished using FI omnibus accounts;
this presents an opportunity for research into regional trusted
peer-to-peer networks and money laundering detection
practices related to transfers of funds between omnibus
accounts. Another solution that may address privacy concerns
is the emerging blockchain framework Corda whose
development is supported by a consortium of global financial
services organizations [31]. Research and publications on the
Corda framework is non-existent aside from self-published
whitepapers, thus presenting an opportunity for research into
this evolving blockchain technology.
V. CONCLUSION
This research presented a conceptual model of a trusted peer-
to-peer network that implements blockchain technology to
reduce the risk of money laundering. The employing of
machine learning to money laundering detection in a trusted
peer-to-peer network could minimize money laundering
practices by criminals. Further research is required to evaluate
the feasibility of the application of the model as an international
standard for money movement.
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