Analysis of Digital Financial Data

By Kardell, Robert L. | The FBI Law Enforcement Bulletin, August 2011 | Go to article overview

Analysis of Digital Financial Data


Kardell, Robert L., The FBI Law Enforcement Bulletin


Over the past 15 to 20 years, the amount of digital financial data that investigators receive in response to subpoenas, seize during the execution of a search warrant, or collect during an arrest has risen dramatically. Financial data quickly can overwhelm investigators as the number of transactions may run into the thousands for individuals or even into the millions for businesses. Culling through the data and identifying relevant transactions can become a daunting task, especially for law enforcement professionals investigating allegations of fraud on an unfamiliar proprietary bookkeeping system.

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Fraud investigators inside and outside the government have developed methods to quickly identify suspicious financial transactions. Determining the most useful techniques for a particular investigation depends on two factors: the amount and type of data received. Based on these two characteristics, the range of successful techniques will differ for each case. The author reviews some of the tools and methods an investigator can use to conduct investigative analysis and identify suspicious financial transactions. (1)

DIGITALANALYSIS TOOLS

While many computers come equipped with standard office software, numerous commercial products allow investigators to analyze financial data with the techniques presented below. Each has limitations of some sort, either with price or usability, but, ultimately, the choice depends on the user's preferences and knowledge.

Spreadsheets

The most common method to cull through data and identify suspicious transactions is to load data into spreadsheet programs, for which numerous commercial products exist. Legacy versions of popular commercial software were limited to approximately 65,000 rows of data for each spreadsheet in a workbook, but the newest versions can handle many more rows of data. In the past, for data sets with more than 65,000 rows of data, investigators had to split the information into multiple sheets or enter it into a database. Although databases certainly can conduct more complex and faster analysis than spreadsheets, the same techniques can yield equally effective results in either type of program.

Databases

Working with databases may prove much more complicated than working with spreadsheets. However, using databases also can be extremely fast, even with large data sets. Many reasonably priced or free servers exist, and these systems provide a solution for investigators who have a large data set or multiple users who need to access it simultaneously. Each system can process several million rows of transactions and other data.

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Hybrid Applications

Some applications used for accounting/forensic analysis combine aspects of database and spreadsheet programs. One such commercial hybrid application, though originally designed for financial audits, can conduct accounting/forensic or fraud analysis very efficiently. The application fuses characteristics of a spreadsheet and a database; its format resembles; spreadsheet, but it can handle a amount of data comparable to c database. It can create, import, edit, and even link multiple data tables to each other. Subsets of tables easily can be created from the results of searches and queries. The program comes with a number of built-in formulae to assist with analysis, and it can process unique scripting language to automate routine analytical tasks.

METHODS TO IDENTIFY UNUSUAL TRANSACTIONS

Data Assessment and Technique Identification

To identify unusual transactions, investigators should begin by reviewing all of the data and the transaction records that they possess because the characteristics of the data completely determine the analyses that investigators can perform. First, investigators should brainstorm potential clues and other insights that they might glean from each of the data fields. …

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