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Fraud and Corruption Detection System

Fraud and Corruption Detection System. World Bank India Ministry of Health and Family Welfare. Conan C. Albrecht, PhD Brigham Young University. Type 1 and 2 Errors. Detectlet Introduction. A Detection Solution. Detectlets.

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Fraud and Corruption Detection System

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  1. Fraud and Corruption Detection System World Bank India Ministry of Health and Family Welfare Conan C. Albrecht, PhDBrigham Young University

  2. Type 1 and 2 Errors

  3. Detectlet Introduction A Detection Solution

  4. Detectlets • Since fraudsters constantly change and update their schemes, the system needs to quickly adapt and improve • The fraud knowledge is encoded in detectlets: small, self-contained plugins Sequential Security Instrument Numbers Fraud Detection System Contracts not matching Benford’s Law Item Amounts That Are Exact Percentages

  5. Detectlets A detectlet encodes: Background information on a scheme Detail on a specific indicator of the scheme Wizard interface to walk the user through input selection Algorithm coded in standard format “How to interpret results” follow-up

  6. Detectlet Example: Digital Analysis

  7. View All Contracts Screen

  8. View Contract Detail Screen

  9. View Contract Indicators Screen

  10. Maintain Indicators Screen

  11. Example Fraud Indicators • Red Flags of Collusion • Winning bid too high compared with cost estimates, published price lists, similar jobs or industry • Persistent high prices by all bidders • Bid prices drop when a new bidder enters the competition • Rotation of bidders by job, work, or geography • Losing bidders hired as subcontractors • Round numbers in bids • Bids exact percentages apart • Address, phone, name matching of bidders • Sequential bid securities, bonds, etc • Certain companies always bid against each other • Losing bidders submit identical bids on different jobs • Distant bidders underbid local bidders • Different amounts bid on same items by same bidder in different contracts

  12. Why Detectlets Work • Economy • Framework is free (and always will be) • It is released under the GPL • The entire cost structure is based on open source software • Linux operating system (if desired) • Python language • PostgreSQL, MySQL, ODBC databases • Picalo

  13. Why Detectlets Work • Self-Sustainability • Detectlets puts the development and maintenance of the tools in the hands of the community. It does not rely upon a company or single source. • The framework allows countries to build and evolve their own, specific corruption libraries • It also encourages sharing of these libraries

  14. Why Detectlets Work • Repeatability • Detectlet routines are scripted, meaning they can be repeated, adjusted, and upgraded • Routines developed for one area can serve as the basis for routines in another area • A central repository is being developed right now • http://www.picalo.org/

  15. Why Detectlets Work • Viability • The framework is realistic - comprehensive data analysis requires scripting. Detectlets support this advanced type of analysis • Detectlets can be embedded into existing systems • The framework makes logistics easier • No keys to buy and distribute (or lose) • No need for expensive piracy audits • It can be installed on as many computers as desired

  16. Example Fraud Detection Systems • United Nations Red Flags Application • Amoco Oil (now British Petroleum) Fraud Detection Database • North Carolina Picalo Data Mining System • India Ministry of Health andFamily Welfare

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