Improving anti-money laundering in bitcoin using evolving graph convolutions and deep neural decision forest

• Published in: Data technologies and applications 2023-06, Vol.57 (3), p.313-329
• Main Authors: Mohan, Anuraj, P.V., Karthika, Sankar, Parvathi, Maya Manohar, K., Peter, Amala
• Format: Article
• Language: English
• Subjects: Algorithms; Artificial neural networks; Blockchain; Classification; Criminals; Currency; Datasets; Decision trees; Digital currencies; Distillation; Economic conditions; Evolution; Financial institutions; Machine learning; Money laundering; Networks; Regression analysis
• ISSN: 2514-9288; 2514-9318; 2514-9288
• DOI: 10.1108/DTA-06-2021-0167

PurposeMoney laundering is the process of concealing unlawfully obtained funds by presenting them as coming from a legitimate source. Criminals use crypto money laundering to hide the illicit origin of funds using a variety of methods. The most simplified form of bitcoin money laundering leans hard on the fact that transactions made in cryptocurrencies are pseudonymous, but open data gives more power to investigators and enables the crowdsourcing of forensic analysis. With the motive to curb these illegal activities, there exist various rules, policies and technologies collectively known as anti-money laundering (AML) tools. When properly implemented, AML restrictions reduce the negative effects of illegal economic activity while also promoting financial market integrity and stability, but these bear high costs for institutions. The purpose of this work is to motivate the opportunity to reconcile the cause of safety with that of financial inclusion, bearing in mind the limitations of the available data. The authors use the Elliptic dataset; to the best of the authors' knowledge, this is the largest labelled transaction dataset publicly available in any cryptocurrency.Design/methodology/approachAML in bitcoin can be modelled as a node classification task in dynamic networks. In this work, graph convolutional decision forest will be introduced, which combines the potentialities of evolving graph convolutional network and deep neural decision forest (DNDF). This model will be used to classify the unknown transactions in the Elliptic dataset. Additionally, the application of knowledge distillation (KD) over the proposed approach gives finest results compared to all the other experimented techniques.FindingsThe importance of utilising a concatenation between dynamic graph learning and ensemble feature learning is demonstrated in this work. The results show the superiority of the proposed model to classify the illicit transactions in the Elliptic dataset. Experiments also show that the results can be further improved when the system is fine-tuned using a KD framework.Originality/valueExisting works used either ensemble learning or dynamic graph learning to tackle the problem of AML in bitcoin. The proposed model provides a novel view to combine the power of random forest with dynamic graph learning methods. Furthermore, the work also demonstrates the advantage of KD in improving the performance of the whole system.