needles in stack of needles: detecting tax fraud & evasion through big data

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Needles in Stack of Needles: Detecting Tax Fraud & Evasion Through Big Data

Hong-Eng Koh Global Lead, Justice & Public Safety (JPS) Oracle Corporation Vice President (Corporate) The Society for the Policing of Cyberspace (POLCYB)

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The Safe Harbor

The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

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Customer & Partner

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Customer & Partner

Industry Business

Unit

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Global Public Sector Industry Business Unit

Marcel Swart Global Vice President Public Sector & Utilities

§ Tax & Revenue §  Justice & Public Safety (JPS) § Enterprise Modernization § Social Services § City Platform

§ Defense § Public Transportation § Utilities § Licensing, Permitting & Inspections

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Oracle Global Justice & Public Safety Team

Jorge Medina

Cindy Schwimer Tim Wallace

Jeff Penrose David Shepherd

Udi Nessimyan

Koh Hong Eng

Global Lead Director Industry Strategy & Marketing

Bert Oltmans

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Issues & Challenges

Tax Avoidance Tax Evasion

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Issues & Challenges

Tax Avoidance Tax Evasion

Tax Fraud Cyber Security Threats Identity Theft

Crowd-Sourcing Virtual Currency

Social Engineering

Unwilling Customer

Cloud Computing

Social Networking

Cyber Security Threats

How a Hacker Intercepted FBI and Secret Service Calls With Google Maps 27 Feb 2014

US Government Agency Compromised by Social Engineering 4 Nov 2013

2009: “Robin Sage” (The Security Blogger)!Information and intelligence obtained from US military personnel!

2011: “Emily Williams”!“What else can happen outside of data being leaked over social networks?”!

Emily Williams Social Engineering

Virtual Currency

Bitcoin is the offshore tax haven of the future

10 Oct 2013 14 Apr 14

Tax Evasion: Bitcoin Better Than An Offshore Bank

Account

7 Aug 13

Bitcoin: Tax Evasion Currency

•  Unreported Capital Gains •  Keep Income off the Books •  Corporate Slush Funds

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What’s Happening?

http://www.go-gulf.com/blog/60-seconds

Big Data

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VOLUME VELOCITY VARIETY

SOCIAL

BLOG

SMART METER

What is Big Data?

VALUE

Data

Information

Intelligence

“Free this week for a quick gossip/prep before I go and destroy America?” “3 weeks today, we’re totally in LA pissing people off on Hollywood Blvd and diggin’ Marilyn Monroe up!”

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Detecting Tax Fraud & Evasion Through Big Data

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Completing the Broadest Solution

Oracle Tax Analytics Leading with Breadth and Innovation

•  Leveraging recommendations by OECD (Organization for Economic Co-operation & Development) and EC (European Commission)

•  Performance Monitoring at every level of the Agency

•  Pre-Built Oracle Tax Data Model designed to integrate data from multiple sources

•  Data to analyze Compliance •  Data to Identify & Manage Error, Fraud & Corruption

•  Oracle Database & Data Mining •  OBIEE with Scorecard & Strategy Management •  Oracle Data Integrator •  Exadata and Exalytics certification

Integrating Data from Multiple Sources

World Class Oracle Technology

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Oracle Tax Analytics’ Pre-Built Contents Accelerate Your Implementation

Pre-built Foundational Data

Model Point

§  Store data in lowest level of detail

§  Holds history of all entities & transactions

§  Integrate data from MULITLE source applications and 3rd parties

§  Extendable §  Upgradeable

§  Star Schemas: §  Taxpayer

Registration §  Taxpayer accounting §  Collections

§  Aggregates by year, month, week, day & more

§  Aggregates by tax type, industry segment & more

§  ETL mapping

§  Predict individual debt delinquency risk based on past behavior

§  Beneish M-Score Model: business manipulating earnings

§  Altman Z-Score Model: business predicted to go bankrupt

§  Metrics & KPIs based on OECD & EC recommendations

§  For directors/ commissioners, managers & other business users

§  Perform ad-hoc analysis

§  Create reports & dashboards

Pre-built Data Models for

Reporting Pre-built

Analytical Models Pre-built Library of

Metrics

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Oracle Tax Analytics – Solution Overview

Agency Systems S

ourc

e

Sys

tem

s P

re-B

uilt

Tax

Dat

a M

odel

P

re-B

uilt

Con

tent

Motor Vehicle Department

Land / Property

Registration

Oracle PSRM Customs Banks Population

Registry … …

Facts, Dimensions and Aggregates, Data Mining Models

Entities Transactions Assets Interactions

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Oracle Tax Analytics – Great, but…

§ Fraud has already taken place, so money is gone… § Models are based on historic perspective of non-compliance § Models do not take into account the changes in behavior associated

with non-compliance § Models tend to be static and difficult to change/update § Most fraud systems deliver and overwhelming amount of false

positives

We need more than “Needle in the Hay Stack”

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A New Way – Compliant Taxpayer Modeling

§ Capture behavior in a model of a ‘normal’ compliant taxpayer § Capture relevant data – Big Data § Reflect current behaviors and profiles against the “Compliant Taxpayer”

model and the absence of good behavior is a pointer to non-compliance

Needles in Stack of Needles

You don’t know what you don’t know Endeca Information Discovery

You know what you don’t know Traditional Business Intelligence & Analytics

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Oracle Advanced Fraud Management Needles in Stack of Needles

Oracle Tax Analytics

Endeca Info Discovery Real-Time Decisions Master Data Management

Oracle Big Data Appliance

Exadata

Oracle GoldenGate Oracle Data Integrator

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What About Day Zero & Social Engineering Attacks ?

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Day Zero & Social Engineering Attacks Big Data to the Rescue

Oracle  Big  Data  Appliance

NoSQL  DB  Driver

Application

HDFS,  Hadoop,  CDH

Map  ReduceORCH  -­‐ Stats

Map  ReduceHive  -­‐ Activities

Map  ReducePig  -­‐ Sessionize

Cyber  Information  Discovery

Complex EventProcessing

Expert SystemDecisionEngine

Cyber  Real-­‐time  Analysis  

API/NBI  SIEM/SOC  

Mass  Analysis\Algorithm

s  Layer

Probe/Switch

LAN

Probe/switch

Real-­‐time  Access  

Batch  Processing

System  M

onitoring  &  M

anagement

§ Cyber Intelligence § Network Behavior

Anomaly Detection (NBAD)

§ Analytics & Reporting § DPI-based Router

•  Big Data Appliance •  Oracle Event Processing •  Real-Time Decisions •  Endeca Information Discovery

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Day Zero & Social Engineering Attacks Big Data to the Rescue

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Prevention is Better than Cure

And, converting unwilling customers to willing customers

In addition to: •  Document/content

management •  eFiling •  Single Window • Multi channel •  PKI •  Payment gateway •  Etc.

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1. Customer Relationship Management (CRM)

•  Siebel Case Management

Examples: •  Australian

Taxation Office •  New Zealand

Inland Revenue Department

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2. Remove the Complexities Natural Language Taxation Policy Management

•  Oracle Policy Automation Source Tax Policies Tax Policies in OPA

Examples: •  Angola •  Hungary •  Netherlands •  Kuwait •  Mozambique •  New Zealand •  Qatar •  Sweden •  UK •  USA

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3. Social Relationship Management (SRM)

§ Engage the community as part of community policing

§ Better understanding of public sentiments

§  Improve crime analysis over social networks

§ Early detection of suspicious activities and crime suspects

§  Incorporate new techniques in crime investigation process

A Federal Police Agency in Latin America

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Back to the Two British Tourists…

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Automated Targeting System (ATS)

§ Rules based decision support system § Data sources: government and public § Historical data and trends analysis § Deployed for air, land and sea travel § Massive volume of data §  Identify high risk targets § Faster clearance for low risk traveler/

cargo

US Customs & Border Protection National Targeting Center

Source: Internet

•  Exadata •  Exalogic •  Exalytics

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Parts versus Engineered Systems

Big Data Appliance

Exadata Exalogic

•  Exadata •  Exalogic •  Exalytics

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hong-eng.koh@oracle.com

@he_koh

linkedin.com/in/hekoh

Thank You!