It’s important to note that an unusual transaction depends on the context. An unusual transaction for one company might be completely normal for another company. The internal audit team has a better sense of what’s normal in an organization. 

In our fraud case, study the CFO reversed Cost of Goods sold. It was flagged as highly unusual.

Machine learning is often used to spot “red flag” patterns in structured data (data with a predictable structure, like spreadsheets, databases, and financial data formats). Examples an unusual transaction include identifying suspicious insurance claims, unusual banking transactions, and credit card activity.

Machine learning is also useful in network relationship analysis. In this application, machine learning explores the connections between people and entities. Often complex, relationship networks are quickly quantified with an unsupervised learning approach called “clustering” allowing the examiner to efficiently find key relationships and the web of communications and influence. The source of such data is often corporate email, but may also include phone records and social media.