Two years ago, I once said: “Simulation is my telescope to explore the universe of financial fraud”, just few days ago, this comparison came back to my mind when the first even picture of a black hole was achieved through the coordinated effort of more than 200 scientists and observatories all around the globe.

“I can think of myself as an astronomer, eager to learn more about the universe, but without a proper tool or telescope it would be hard to learn more than I can see with my eyes. Simulation is my telescope to explore the universe of financial fraud.” Dr. Edgar Lopez-Rojas (interview at Kaggle 2017).

Some years ago, I published a synthetic dataset in Kaggle that contained a generated scenario from a real dataset sample for a Mobile Money Payments’ system in an African country. The PaySim dataset was probably the first synthetic transactional dataset shared openly and released in a known data scientist community platform. This fact led Kaggle to name the PaySim dataset as the “dataset of the week” and during a short interview I compared the use of simulation with the development of a telescope. Today, two years after, the PaySim dataset has acquired great popularity, more than 120k views so far, and has been widely used by several students for their thesis, practitioners, enthusiasts and recognized institutions such as Databricks and IBM-MIT Watson lab.

The war against crime requires similar effort and coordinated actions from all parties to make a significant improvement and move the odds to win in our side. I believe Simulation is the key to unveil a whole new universe of hidden fraud that lies in our financial services.

Modern world and new technologies possess new challenges that limit our efficiency and efficacy against criminal activities. But at the same time bring new opportunities for the soldiers against fraud.

By using simulation and generated synthetic datasets researchers and financial services are able to communicate results under the strict confidential agreements that represent the handling of personal data and the new GDPR regulations. Regulators have the task to fund and incentivise the efforts of academia and financial sector and at the same time use simulation models to create better policies that are up to the task of efficiently reducing the crime profit.

Galileo didn’t build the Everest Horizon Virtual Telescope on his first attempt, but he laid the foundation for others to incrementally build every day more and better telescopes. Simulation has been among us for several years and today, we have the technology, the computational power and the knowledge to use it as a powerful weapon in the fight against financial fraud.

Written by Dr Edgar Lopez-Rojas
Founder & CTO of FinCrime Dynamics