Machine Learning in Money Laundering Detection Over Blockchain Technology

Layering through cryptocurrency transactions represents a sophisticated mechanism for laundering money within cybercrime circles. This process methodically merges illegal funds into the legitimate financial system. Blockchain technology plays a crucial role in this integration by facilitating the quick and automated dispersal of assets across various digital wallets and exchanges. Machine learning emerges as a powerful tool for analyzing and identifying illicit transactions within Blockchain networks; however, a significant challenge remains in the form of a gap in advanced pattern recognition algorithms. This paper introduces a novel machine learning-based approach called Value-driven-Transactional tracking Analytics for Crypto compliance (VTAC) for the detection of illegal crypto transactions via Blockchain. The approach combines machine learning algorithms with a pre-training process, normalization, model training, and a de-anonymization process to analyze and identify illicit transactions effectively. Experimental evaluations show VTAC’s capability to detect illegal transactions with a 97.5% accuracy using the XG Boost model, outperforming existing methods with an accuracy of up to 95.9%. Key performance metrics, including precision, recall, and F1-score, consistently exceeded 95%, highlighting VTAC’s enhanced precision and reliability. The proposed solution will serve as an advisory framework to help financial crime investigators enhance the detection and reporting of suspicious cryptocurrency transactions in cyberspace.

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Publication Details

Journal
IEEE Access
Published
2024-08-29
DOI
https://doi.org/10.1109/access.2024.3452003
Citations
15
Primary Topic
Blockchain Technology Applications and Security
Type
article
Field-Weighted Citation Impact
11.69
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article

Machine Learning in Money Laundering Detection Over Blockchain Technology

Algimantas Venčkauskas, Andrejs Romānovs, Rasa Brūzgienė, Šarūnas Grigaliūnas et al.
15 citations
IEEE Access
Blockchain Technology Applications and Security
11.69
article

Machine Learning in Money Laundering Detection Over Blockchain Technology

Algimantas Venčkauskas, Andrejs Romānovs, Rasa Brūzgienė, Šarūnas Grigaliūnas, Linas Pocius
article en
15 citations

Abstract

Layering through cryptocurrency transactions represents a sophisticated mechanism for laundering money within cybercrime circles. This process methodically merges illegal funds into the legitimate financial system. Blockchain technology plays a crucial role in this integration by facilitating the quick and automated dispersal of assets across various digital wallets and exchanges. Machine learning emerges as a powerful tool for analyzing and identifying illicit transactions within Blockchain networks; however, a significant challenge remains in the form of a gap in advanced pattern recognition algorithms. This paper introduces a novel machine learning-based approach called Value-driven-Transactional tracking Analytics for Crypto compliance (VTAC) for the detection of illegal crypto transactions via Blockchain. The approach combines machine learning algorithms with a pre-training process, normalization, model training, and a de-anonymization process to analyze and identify illicit transactions effectively. Experimental evaluations show VTAC’s capability to detect illegal transactions with a 97.5% accuracy using the XG Boost model, outperforming existing methods with an accuracy of up to 95.9%. Key performance metrics, including precision, recall, and F1-score, consistently exceeded 95%, highlighting VTAC’s enhanced precision and reliability. The proposed solution will serve as an advisory framework to help financial crime investigators enhance the detection and reporting of suspicious cryptocurrency transactions in cyberspace.

IEEE AccessVol. 13
Kaunas University of Technology (LT), Riga Technical University (LV)
Peace, Justice and strong institutions
Openalex Percentile: Top 2%
Blockchain Technology Applications and Security
11.69
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