FAR-FD: Feature Augmented Retrieval for Fraud Detection

Fraud detection plays a crucial role in the financial industry, preventing significant financial losses. Traditional rule-based systemsand manual audits often struggle with the evolving nature of fraud schemes and the vast volume of transactions. While traditional machine learning and deep learning methods have made headway, significant room for improvement remains with problems such as class imbalance, high feature cardinality and adversarial dynamics. To address these limitations, we propose FAR-FD, the first work to integrate a subset of important features in Retrieval Augmented Classification (RAC), and the second work to use RAC for fraud detection. Our model utilises a pre-trained SAINT encoder, a self-supervised learning method, comprising of retrieval, integration, and predictor modules, jointly trained to dynamically leverage similar instances for each input sample. This approach not only enables the model to utilize the context of similar fraud patterns but uniquely positions it for real-time fraud detection by maintaining an external database that can be continuously updated as sophisticated fraud patterns emerge without requiring model retraining. We validate the effectiveness of FAR-FD through extensive experiments on a large scale real-world dataset and achieve state-of-the-art performance in detecting fraudulent activities. Our code is available at