Financial Fraud Detection — Applied Machine Learning
Presentation by
The OtherGroup
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Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
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Anti Fraud Detection
What Are We Trying to Solve?
Goal
Suspicious activities in financial systems are reported across states, industries, regulators, and payment methods
Identify hidden patterns in these reports using unsupervised learning to support early detection of fraudulent trends
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Fraud Detection
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Fashion
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Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
Identify patterns in suspicious financial activity reports.
Use unsupervised learning to detect natural groupings in data.
Support early fraud detection by understanding behavior clusters.
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What does the Dataset say?
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Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
233,000+ records with categorical and numeric fields.
Key columns: Industry, Product, Instrument, Regulator, Count.
Challenges: high-cardinality features, '[Total]' summary rows.
Handled with cleaning, encoding, and filtering.
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What does the Dataset say?
Convenience
Fashion
Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
233,000+ records with categorical and numeric fields.
Key columns: Industry, Product, Instrument, Regulator, Count.
Challenges: high-cardinality features, '[Total]' summary rows.
Handled with cleaning, encoding, and filtering.
Text from slide 2
What does the Dataset say?
Convenience
Fashion
Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
233,000+ records with categorical and numeric fields.
Key columns: Industry, Product, Instrument, Regulator, Count.
Challenges: high-cardinality features, '[Total]' summary rows.
Handled with cleaning, encoding, and filtering.
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Approach & Preprocessing
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Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
Removed '[Total]’ rows – they distort clustering.
Used one-hot encoding for categorical data.
Used frequency encoding for high-cardinality fields.
Applied StandardScaler to normalize feature ranges.
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Dimensionality Reduction (PCA)
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Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
PCA reduces high-dimensional data into 2D.
Reveals hidden patterns and natural structure.
Validated potential for clustering by showing separations visually.
Clustering for Pattern Discovery
Applied KMeans with 4 clusters (based on PCA spread).
Cluster 1: Dominant group (~17,000 records).
Cluster 2: Small but potentially significant (~667 records).
Clear group separation in PCA projection.
Interpretation & Insights
Cluster 1 – Common regulators and products.
Cluster 2 – Unique characteristics, possible outlier pattern.
Profiling clusters helps target fraud detection strategies.
Reveals how fraud behaviors group across features.
Text from slide 2
Convenience
Fashion
Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
Clustering for Pattern Discovery
Applied KMeans with 4 clusters (based on PCA spread).
Cluster 1: Dominant group (~17,000 records).
Cluster 2: Small but potentially significant (~667 records).
Clear group separation in PCA projection.
Text from slide 2
Convenience
Fashion
Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
Interpretation & Insights
Cluster 1 – Common regulators and products.
Cluster 2 – Unique characteristics, possible outlier pattern.
Profiling clusters helps target fraud detection strategies.
Reveals how fraud behaviors group across features.
Text from slide 2
Convenience
Fashion
Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
Thank you!
Text from slide 2
Convenience
Fashion
Warm
Lorem Ipsum is simply dummy text of the printing and typesetting industry.
Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.
It has survived not only five centuries, but also the leap into electronic typesetting.
The OtherGroup
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