An Intelligent Financial Fraud Indication System Using Fuzzy Logic

Abstract

The issue of financial fraud is taking different dimensions in various countries due to rise in fraud enabling factors emanating from internal and external challenges. The internal challenges from unemployment rate depend on overpopulation, poor standard of living and nature of existing leadership of government. Recent advancement in modern technology and increase in tourist activities have contributed to the existing external challenges. In this paper, an intelligent financial fraud indication system using fuzzy logic is proposed, which involves the use of fuzzy arithmetic, fuzzy degree of association, fuzzy inference, fuzzy rules and different surface plot in determination of different relationship as it relate to certain choice of inputs. The selected input indices were meant to determine how certain degree of changes in inputs can affect the nature of fraud indication. The proposed system also depends on fraud enabling factors in the determination of appropriate fraud indication level. From the results obtained, it is shown that people from areas with high population, high political activities and high education are likely to be engaged in more financial fraud compared to an area in which population, political activities and education are low.