A Blockchain-based Forensic Model for Financial Crime Investigation: The Embezzlement Scenario
29 Pages Posted: 14 Jan 2021
Date Written: August 30, 2020
The financial crime landscape is evolving along with the digitization in financial services. In this context, laws and regulations cannot efficiently cope with a fast-moving industry such as finance, which translates in late adoption of measures and legal voids, providing a fruitful landscape for malicious actors. In parallel, blockchain technology and its promising features such as immutability, verifiability, and authentication, enhance the opportunities of financial forensics. In this paper, we focus on an embezzlement scheme and we provide a forensic-by-design methodology for its investigation. In addition, the feasibility and adaptability of our approach can be extended and embrace digital investigations on other types of schemes. We provide a functional implementation based on smart contracts and we integrate standardized forensic flows and chain of custody preservation mechanisms. Finally, we discuss the benefits and challenges of the symbiotic relationship between blockchain and financial investigations, along with future research directions.
Keywords: Forensics, Blockchain, Chain of Custody, Embezzlement, Fraud detection
JEL Classification: K42, K41, M42, G21
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