GARG-AML against Smurfing: A Scalable and Interpretable Graph-Based Framework for Anti-Money Laundering

arXiv:2506.04292v3 Announce Type: replace-cross Abstract: Purpose: We introduce GARG-AML, a fast and transparent graph-based method to catch `smurfing', a common money-laundering tactic. It assigns a single, easy-to-understand risk score to every account in both directed and undirected networks. Unlike overly complex models, it balances detection power with the speed and clarity that investigators require. Methodology: The method maps an account's immediate and secondary connections (its second-order neighbourhood) into an adjacency matrix. By measuring the density of specific blocks within this matrix, GARG-AML flags patterns that mimic smurfing behaviour. We further boost the model's performance using decision trees and gradient-boosting classifiers, testing the results against current state-of-the-art on both synthetic and open-source data. Findings: GARG-AML matches or beats state-of-the-art performance across all tested datasets. Crucially, it easily processes the massive transaction graphs typical of large financial institutions. By leveraging only the adjacency matrix of the second-order neighbourhood and basic network features, this work highlights the potential of fundamental network properties towards advancing fraud detection. Originality: The originality lies in the translation of human expert knowledge of smurfing directly into a simple network representation, rather than relying on uninterpretable deep learning. Because GARG-AML is built expressly for the real-world business demands of scalability and interpretability, banks can easily incorporate it in their existing AML solutions.

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Source: arXiv cs.LG | 2026-04-24