We propose a novel QTGNN framework for detecting fraudulent transactions in large-scale financial networks. By integrating quantum embedding, variational graph convolutions, and topological data analysis, QTGNN captures complex transaction dynamics and structural anomalies indicative of fraud. The methodology includes quantum data embedding with entanglement enhancement, variational quantum graph convolutions with non-linear dynamics, extraction of higher-order topological invariants, hybrid quantum-classical anomaly learning with adaptive optimization, and interpretable decision-making via topological attribution. Rigorous convergence guarantees ensure stable training on noisy intermediate-scale quantum (NISQ) devices, while stability of topological signatures provides robust fraud detection. Optimized for NISQ hardware with circuit simplifications and graph sampling, the framework scales to large transaction networks. Simulations on financial datasets, such as PaySim and Elliptic, benchmark QTGNN against classical and quantum baselines, using metrics like ROC-AUC, precision, and false positive rate. An ablation study evaluates the contributions of quantum embeddings, topological features, non-linear channels, and hybrid learning. QTGNN offers a theoretically sound, interpretable, and practical solution for financial fraud detection, bridging quantum machine learning, graph theory, and topological analysis.

Iva Popova Hamza A. A. Gardi ETIT - KIT, Germany IIIT at ETIT - KIT, Germany Abstract Credit card fraud remains a significant challenge due to class imbalance and fraudsters mimicking legitimate behavior. This study evaluates five machine learning models - Logistic Regression, Random Forest, XGBoost, K - Nearest Neighbors (KNN), and Multi - Lay er Perceptron (MLP) on a real - world dataset using undersampling, SMOTE, and a hybrid approach. Our models are evaluated on the original imbalanced test set to better reflect real - world performance. Results show that the hybrid method achieves the best bala nce between recall and precision, especially improving MLP and KNN performance. I ntroduction Financial fraud is a significant issue that has been continuously increasing over the past few years due to the ever - growing volume of online transactions conduc ted with credit cards. Credit card fraud (CCF) refers to a type of fraud in which an individual other than the cardholder unlawfully conducts transactions using a card that is stolen, lost, or otherwise misused [ 1 ]. CCF has resulted in billions of dollars in losses for banks and other online payment platforms. According to the Federal Trade Commission (FTC), there were 449,076 reports of CCF in 2024, representing a 7.8% increase from the previous year [ 2 ]. Given this trend, new methods must be employed to c apture patterns and dependencies in the data.

Detecting fraud in modern supply chains is a growing challenge, driven by the complexity of global networks and the scarcity of labeled data. Traditional detection methods often struggle with class imbalance and limited supervision, reducing their effectiveness in real-world applications. This paper proposes a novel two-phase learning framework to address these challenges. In the first phase, the Isolation Forest algorithm performs unsupervised anomaly detection to identify potential fraud cases and reduce the volume of data requiring further analysis. In the second phase, a self-training Support Vector Machine (SVM) refines the predictions using both labeled and high-confidence pseudo-labeled samples, enabling robust semi-supervised learning. The proposed method is evaluated on the DataCo Smart Supply Chain Dataset, a comprehensive real-world supply chain dataset with fraud indicators. It achieves an F1-score of 0.817 while maintaining a false positive rate below 3.0%. These results demonstrate the effectiveness and efficiency of combining unsupervised pre-filtering with semi-supervised refinement for supply chain fraud detection under real-world constraints, though we acknowledge limitations regarding concept drift and the need for comparison with deep learning approaches.

Fraud detection is one of the most important challenges that financial systems must address. Detecting fraudulent transactions is critical for payment gateway companies like Flow Payment, which process millions of transactions monthly and require robust security measures to mitigate financial risks . Increasing transaction authorization rates while reducing fraud is essential for providing a good user experience and building a sustainable business. For this reason, discovering novel and improved methods to detect fraud requires continuous research an d investment for any company that wants to succeed in this industry. In this work, we introduce d a novel method for detecting transactional fraud by incorporating the Relative Distance Rotating Encoding ( ReDRE) in the RoFormer model . The incorporation of angle rotation using ReDRE enhances the characterization of time series data within a Transformer, leading to improved fraud detection by better capturing temporal dependencies and event relationships.

This research introduces an innovative method for identifying credit card fraud by combining the SMOTE-KMEANS technique with an ensemble machine learning model. The proposed model was benchmarked against traditional models such as logistic regression, decision trees, random forests, and support vector machines. Performance was evaluated using metrics, including accuracy, recall, and area under the curve (AUC). The results demonstrated that the proposed model achieved superior performance, with an AUC of 0.96 when combined with the SMOTE-KMEANS algorithm. This indicates a significant improvement in detecting fraudulent transactions while maintaining high precision and recall. The study also explores the application of different oversampling techniques to enhance the performance of various classifiers. The findings suggest that the proposed method is robust and effective for classification tasks on balanced datasets. Future research directions include further optimization of the SMOTE-KMEANS approach and its integration into existing fraud detection systems to enhance financial security and consumer protection.

The integration of Large Language Models (LLMs) into autonomous robotic agents for conducting online transactions poses significant cybersecurity challenges. This study aims to enforce robust cybersecurity constraints to mitigate the risks associated with data breaches, transaction fraud, and system manipulation. The background focuses on the rise of LLM-driven robotic systems in e-commerce, finance, and service industries, alongside the vulnerabilities they introduce. A novel security architecture combining blockchain technology with multi-factor authentication (MFA) and real-time anomaly detection was implemented to safeguard transactions. Key performance metrics such as transaction integrity, response time, and breach detection accuracy were evaluated, showing improved security and system performance. The results highlight that the proposed architecture reduced fraudulent transactions by 90%, improved breach detection accuracy to 98%, and ensured secure transaction validation within a latency of 0.05 seconds. These findings emphasize the importance of cybersecurity in the deployment of LLM-driven robotic systems and suggest a framework adaptable to various online platforms.

This paper proposes a financial fraud detection system based on improved Random Forest (RF) and Gradient Boosting Machine (GBM). Specifically, the system introduces a novel model architecture called GBM-SSRF (Gradient Boosting Machine with Simplified and Strengthened Random Forest), which cleverly combines the powerful optimization capabilities of the gradient boosting machine (GBM) with improved randomization. The computational efficiency and feature extraction capabilities of the Simplified and Strengthened Random Forest (SSRF) forest significantly improve the performance of financial fraud detection. Although the traditional random forest model has good classification capabilities, it has high computational complexity when faced with large-scale data and has certain limitations in feature selection. As a commonly used ensemble learning method, the GBM model has significant advantages in optimizing performance and handling nonlinear problems. However, GBM takes a long time to train and is prone to overfitting problems when data samples are unbalanced. In response to these limitations, this paper optimizes the random forest based on the structure, reducing the computational complexity and improving the feature selection ability through the structural simplification and enhancement of the random forest. In addition, the optimized random forest is embedded into the GBM framework, and the model can maintain efficiency and stability with the help of GBM's gradient optimization capability. Experiments show that the GBM-SSRF model not only has good performance, but also has good robustness and generalization capabilities, providing an efficient and reliable solution for financial fraud detection.

Credit card fraud detection remains a critical challenge in financial security, with machine learning models like XGBoost(eXtreme gradient boosting) emerging as powerful tools for identifying fraudulent transactions. However, the inherent class imbalance in credit card transaction datasets poses significant challenges for model performance. Although sampling techniques are commonly used to address this imbalance, their implementation sometimes precedes the train-test split, potentially introducing data leakage. This study presents a comparative analysis of XGBoost's performance in credit card fraud detection under three scenarios: Firstly without any imbalance handling techniques, secondly with sampling techniques applied only to the training set after the train-test split, and third with sampling techniques applied before the train-test split. We utilized a dataset from Kaggle of 284,807 credit card transactions, containing 0.172\% fraudulent cases, to evaluate these approaches. Our findings show that although sampling strategies enhance model performance, the reliability of results is greatly impacted by when they are applied. Due to a data leakage issue that frequently occurs in machine learning models during the sampling phase, XGBoost models trained on data where sampling was applied prior to the train-test split may have displayed artificially inflated performance metrics. Surprisingly, models trained with sampling techniques applied solely to the training set demonstrated significantly lower results than those with pre-split sampling, all the while preserving the integrity of the evaluation process.

Current trends in Machine Learning prefer explainability even when it comes at the cost of performance. Therefore, explainable AI methods are particularly important in the field of Fraud Detection. This work investigates the applicability of Differentiable Inductive Logic Programming (DILP) as an explainable AI approach to Fraud Detection. Although the scalability of DILP is a well-known issue, we show that with some data curation such as cleaning and adjusting the tabular and numerical data to the expected format of background facts statements, it becomes much more applicable. While in processing it does not provide any significant advantage on rather more traditional methods such as Decision Trees, or more recent ones like Deep Symbolic Classification, it still gives comparable results. We showcase its limitations and points to improve, as well as potential use cases where it can be much more useful compared to traditional methods, such as recursive rule learning.

As online fraud becomes more sophisticated and pervasive, traditional fraud detection methods are struggling to keep pace with the evolving tactics employed by fraudsters. This paper explores the transformative role of machine learning in addressing these challenges by offering more advanced, scalable, and adaptable solutions for fraud detection and prevention. By analyzing key models such as Random Forest, Neural Networks, and Gradient Boosting, this paper highlights the strengths of machine learning in processing vast datasets, identifying intricate fraud patterns, and providing real-time predictions that enable a proactive approach to fraud prevention. Unlike rule-based systems that react after fraud has occurred, machine learning models continuously learn from new data, adapting to emerging fraud schemes and reducing false positives, which ultimately minimizes financial losses. This research emphasizes the potential of machine learning to revolutionize fraud detection frameworks by making them more dynamic, efficient, and capable of handling the growing complexity of fraud across various industries. Future developments in machine learning, including deep learning and hybrid models, are expected to further enhance the predictive accuracy and applicability of these systems, ensuring that organizations remain resilient in the face of new and emerging fraud tactics.