The UN estimates 2-5% of global GDP or $0.8 - $2.0 trillion dollars are laundered

The decentralized finance (DeFi) community has grown rapidly in recent years, pushed forward by cryptocurrency enthusiasts interested in the vast untapped potential of new markets. The surge in popularity of cryptocurrency has ushered in a new era of financial crime. Unfortunately, the novelty of the technology makes the task of catching and prosecuting offenders particularly challenging. Thus, it is necessary to implement automated detection tools related to policies to address the growing criminality in the cryptocurrency realm.

Money laundering and financial fraud remain major threats to global financial stability, costing trillions annually and challenging regulatory oversight. This paper reviews how artificial intelligence (AI) applications can modernize Anti-Money Laundering (AML) workflows by improving detection accuracy, lowering false-positive rates, and reducing the operational burden of manual investigations, thereby supporting more sustainable development. It further highlights future research directions including federated learning for privacy-preserving collaboration, fairness-aware and interpretable AI, reinforcement learning for adaptive defenses, and human-in-the-loop visualization systems to ensure that next-generation AML architectures remain transparent, accountable, and robust. In the final part, the paper proposes an AI-driven KYC application that integrates graph-based retrieval-augmented generation (RAG Graph) with generative models to enhance efficiency, transparency, and decision support in KYC processes related to money-laundering detection. Experimental results show that the RAG-Graph architecture delivers high faithfulness and strong answer relevancy across diverse evaluation settings, thereby enhancing the efficiency and transparency of KYC CDD/EDD workflows and contributing to more sustainable, resource-optimized compliance practices.

Large Language Models (LLMs) are increasingly deployed in sensitive domains including healthcare, legal services, and confidential communications, where privacy is paramount. This paper introduces Whisper Leak, a side-channel attack that infers user prompt topics from encrypted LLM traffic by analyzing packet size and timing patterns in streaming responses. Despite TLS encryption protecting content, these metadata patterns leak sufficient information to enable topic classification. We demonstrate the attack across 28 popular LLMs from major providers, achieving near-perfect classification (often >98% AUPRC) and high precision even at extreme class imbalance (10,000:1 noise-to-target ratio). For many models, we achieve 100% precision in identifying sensitive topics like "money laundering" while recovering 5-20% of target conversations. This industry-wide vulnerability poses significant risks for users under network surveillance by ISPs, governments, or local adversaries. We evaluate three mitigation strategies - random padding, token batching, and packet injection - finding that while each reduces attack effectiveness, none provides complete protection. Through responsible disclosure, we have collaborated with providers to implement initial countermeasures. Our findings underscore the need for LLM providers to address metadata leakage as AI systems handle increasingly sensitive information.

In this paper, we focused on using deep learning methods for detecting money laundering in financial transaction networks, in order to demonstrate that it can be used as a complement or instead of the more commonly used rule-based systems and conventional Anti-Money Laundering (AML) systems. The paper explores the pivotal role played by Anti-Money Laundering (AML) activities in the global financial industry. It underscores the drawbacks of conventional AML systems, which exhibit high rates of false positives and lack the sophistication to uncover intricate money laundering schemes. To tackle these challenges, the paper proposes an advanced AML system that capitalizes on link analysis using deep learning techniques. At the heart of this system lies the utilization of centrality algorithms like Degree Centrality, Closeness Centrality, Betweenness Centrality, and PageRank. These algorithms enhance the system's capability to identify suspicious activities by examining the influence and interconnections within networks of financial transactions. The significance of Anti-Money Laundering (AML) efforts within the global financial sector is discussed in this paper. It highlights the limitations of traditional AML systems. The results showed the practicality and superiority of the new implementation of the GCN model, which is a preferable method for connectively structured data, meaning that a transaction or account is analyzed in the context of its financial environment. In addition, the paper delves into the prospects of Anti-Money Laundering (AML) efforts, proposing the integration of emerging technologies such as deep learning and centrality algorithms. This integration holds promise for enhancing the effectiveness of AML systems by refining their capabilities.

Conventional anti-money laundering (AML) systems predominantly focus on identifying anomalous entities or transactions, flagging them for manual investigation based on statistical deviation or suspicious behavior. This paradigm, however, misconstrues the true nature of money laundering, which is rarely anomalous but often deliberate, repeated, and concealed within consistent behavioral routines. In this paper, we challenge the entity-centric approach and propose a network-theoretic perspective that emphasizes detecting predefined laundering patterns across directed transaction networks. We introduce the notion of behavioral consistency as the core trait of laundering activity, and argue that such patterns are better captured through subgraph structures expressing semantic and functional roles - not solely geometry. Crucially, we explore the concept of pattern fragility: the sensitivity of laundering patterns to small attribute changes and, conversely, their semantic robustness even under drastic topological transformations. We claim that laundering detection should not hinge on statistical outliers, but on preservation of behavioral essence, and propose a reconceptualization of pattern similarity grounded in this insight. This philosophical and practical shift has implications for how AML systems model, scan, and interpret networks in the fight against financial crime.

Money laundering is a financial crime that poses a serious threat to financial integrity and social security. The growing number of transactions makes it necessary to use automatic tools that help law enforcement agencies detect such criminal activity. In this work, we present Amatriciana, a novel approach based on Graph Neural Networks to detect money launderers inside a graph of transactions by considering temporal information. Amatriciana uses the whole graph of transactions without splitting it into several time-based subgraphs, exploiting all relational information in the dataset. Our experiments on a public dataset reveal that the model can learn from a limited amount of data. Furthermore, when more data is available, the model outperforms other State-of-the-art approaches; in particular, Amatriciana decreases the number of False Positives (FPs) while detecting many launderers. In summary, Amatriciana achieves an F1 score of 0.76. In addition, it lowers the FPs by 55% with respect to other State-of-the-art models.

Money laundering is a financial crime that obscures the origin of illicit funds, necessitating the development and enforcement of anti-money laundering (AML) policies by governments and organizations. The proliferation of mobile payment platforms and smart IoT devices has significantly complicated AML investigations. As payment networks become more interconnected, there is an increasing need for efficient real-time detection to process large volumes of transaction data on heterogeneous payment systems by different operators such as digital currencies, cryptocurrencies and account-based payments. Most of these mobile payment networks are supported by connected devices, many of which are considered loT devices in the FinTech space that constantly generate data. Furthermore, the growing complexity and unpredictability of transaction patterns across these networks contribute to a higher incidence of false positives. While machine learning solutions have the potential to enhance detection efficiency, their application in AML faces unique challenges, such as addressing privacy concerns tied to sensitive financial data and managing the real-world constraint of limited data availability due to data regulations. Existing surveys in the AML literature broadly review machine learning approaches for money laundering detection, but they often lack an in-depth exploration of advanced deep learning techniques - an emerging field with significant potential. To address this gap, this paper conducts a comprehensive review of deep learning solutions and the challenges associated with their use in AML. Additionally, we propose a novel framework that applies the least-privilege principle by integrating machine learning techniques, codifying AML red flags, and employing account profiling to provide context for predictions and enable effective fraud detection under limited data availability....

For different factors/reasons, ranging from inherent characteristics and features providing decentralization, enhanced privacy, ease of transactions, etc., to implied external hardships in enforcing regulations, contradictions in data sharing policies, etc., cryptocurrencies have been severely abused for carrying out numerous malicious and illicit activities including money laundering, darknet transactions, scams, terrorism financing, arm trades. However, money laundering is a key crime to be mitigated to also suspend the movement of funds from other illicit activities. Billions of dollars are annually being laundered. It is getting extremely difficult to identify money laundering in crypto transactions owing to many layering strategies available today, and rapidly evolving tactics, and patterns the launderers use to obfuscate the illicit funds. Many detection methods have been proposed ranging from naive approaches involving complete manual investigation to machine learning models. However, there are very limited datasets available for effectively training machine learning models. Also, the existing datasets are static and class-imbalanced, posing challenges for scalability and suitability to specific scenarios, due to lack of customization to varying requirements. This has been a persistent challenge in literature. In this paper, we propose behavior embedded entity-specific money laundering-like transaction simulation that helps in generating various transaction types and models the transactions embedding the behavior of several entities observed in this space. The paper discusses the design and architecture of the simulator, a custom dataset we generated using the simulator, and the performance of models trained on this synthetic data in detecting real addresses involved in money laundering.