Artificial Intelligence and Machine Learning As a Tool in Preventing and Detecting Financial Fraud: A Systematic Literature Review

Fathmath Raudha and Mitra Saeedi

Evolution of technology has enabled fraudsters to commit modernized fraud and uncovering these fraudulent behaviours is almost impossible through traditional or manual methods. Due to this the need for virtual techniques has become an increasingly important area in the financial industry and particularly in detecting financial fraud. The purpose of this paper is to review the use of Artificial Intelligence (AI) and Machine Learning (ML) in preventing and detecting financial fraud. In this Systematic Literature Review a total of 36 relevant articles were reviewed in a comprehensive way starting with the evolution of financial technology “Fintech” and its contribution to the rapid increase in financial fraud. The prime focus of this paper is to provide an insight into the AI and ML tactics which can be used to confront the issue of financial fraud and to minimize its consequences. Across the reviewed literature, the effective use of these techniques in the financial business environment and their role in making effective financial decisions are analysed and discussed considering industry experiences from practitioners. This review is limited to the specified five AI and ML models and precisely on financial frauds such as credit card fraud and financial statement fraud. Among the reviewed papers the main focus was on applying these techniques in preventing and detecting financial fraud. Noticeably there are few researches about the process, post adoption and effect of these techniques. Thus, this review contributes a needed common basis for fraud detection and provides insights for future researchers.

Volume 11 | 11-Special Issue

Pages: 904-911

DOI: 10.5373/JARDCS/V11SP11/20193114