The application of data mining techniques in financial fraud detection: A classification framework and an academic review of literature
Authors: Ngai, E.W.T.; Hu, Yong; Wong, Y.H.; Chen, Yijun; Sun, Xin
Journal: Decision Support Systems (2011)
DOI: 10.1016/j.dss.2010.08.006
This paper presents a review of — and classification scheme for — the literature on the application of data mining techniques for the detection of financial fraud. Although financial fraud detection (FFD) is an emerging topic of great importance, a comprehensive literature review of the subject has yet to be carried out. This paper thus represents the first systematic, identifiable and comprehensive academic literature review of the data mining techniques that have been applied to FFD. 49 journal articles on the subject published between 1997 and 2008 was analyzed and classified into four categories of financial fraud (bank fraud, insurance fraud, securities and commodities fraud, and other related financial fraud) and six classes of data mining techniques (classification, regression, clustering, prediction, outlier detection, and visualization). The findings of this review clearly show that data mining techniques have been applied most extensively to the detection of insurance fraud, although corporate fraud and credit card fraud have also attracted a great deal of attention in recent years. In contrast, we find a distinct lack of research on mortgage fraud, money laundering, and…