A Blockchain-based Forensic Model for Financial Crime Investigation: The Embezzlement Scenario

29 Pages Posted: 14 Jan 2021

See all articles by Lamprini Zarpala

Lamprini Zarpala

University of Piraeus - Department of Banking and Financial Management

Fran Casino

University of Piraeus - Department of Computer Science

Date Written: August 30, 2020

Abstract

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

Suggested Citation

Zarpala, Lamprini and Casino, Fran, A Blockchain-based Forensic Model for Financial Crime Investigation: The Embezzlement Scenario (August 30, 2020). Available at SSRN: https://ssrn.com/abstract=3740042 or http://dx.doi.org/10.2139/ssrn.3740042

Lamprini Zarpala (Contact Author)

University of Piraeus - Department of Banking and Financial Management ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece

Fran Casino

University of Piraeus - Department of Computer Science ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

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