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This paper addresses critical security vulnerabilities in Federated Learning by proposing "Enhanced Detective," a dual-stage defense mechanism designed to mitigate internal poisoning attacks in financial fraud detection systems. By integrating Median Absolute Deviation and FedMedian aggregation, the method successfully maintains model robustness even when 40% of clients attempt malicious label-flipping or weight-scaling attacks. The work is essential for practitioners deploying distributed AI in privacy-sensitive sectors who require resilient training protocols against adversarial data manipulation.
Enhanced Detective: A Dual-Stage Proactive Defense Against Internal Poisoning Attacks in Financial Fraud Detection Using Federated Learning
arXiv:2610.17523v1 Announce Type: cross Abstract: With recent developments in Artificial Intelligence (AI), the adoption of distributed learning paradigms such as Federated Learning (FL) has emerged. In simple terms, FL enables multiple entities to collaboratively train AI models without sharing local data. The FL paradigm is particularly valuable in privacy-sensitive settings, such as financial services, because it enables institutions to collaboratively improve fraud-detection models while keeping sensitive transaction data local. However, FL schemes are prone to security vulnerabilities, where malicious clients can poison local data or model updates and degrade the global model, and hence the performance of the resulting model might be affected. Therefore, in this work, we propose Enhanced Detective, a dual-stage robust aggregation strategy that combines Median Absolute Deviation (MAD), distance-based update filtering, and FedMedian aggregation. Experiments on an imbalanced credit card dataset evaluate targeted label-flipping and weight-scaling attacks over 50 communication rounds. With 40% malicious clients, Enhanced Detective achieves an AUPRC of 0.796 and a Recall of 0.847.
Abstract:With recent developments in Artificial Intelligence (AI), the adoption of distributed learning paradigms such as Federated Learning (FL) has emerged. In simple terms, FL enables multiple entities to collaboratively train AI models without sharing local data. The FL paradigm is particularly valuable in privacy-sensitive settings, such as financial services, because it enables institutions to collaboratively improve fraud-detection models while keeping sensitive transaction data local. However, FL schemes are prone to security vulnerabilities, where malicious clients can poison local data or model updates and degrade the global model, and hence the performance of the resulting model might be affected. Therefore, in this work, we propose Enhanced Detective, a dual-stage robust aggregation strategy that combines Median Absolute Deviation (MAD), distance-based update filtering, and FedMedian aggregation. Experiments on an imbalanced credit card dataset evaluate targeted label-flipping and weight-scaling attacks over 50 communication rounds. With 40% malicious clients, Enhanced Detective achieves an AUPRC of 0.796 and a Recall of 0.847.
Cryptography and Security (cs.CR); Artificial Intelligence (cs.AI)
arXiv:2610.17523 [cs.CR]
(or arXiv:2610.17523v1 [cs.CR] for this version)
https://doi.org/10.48550/arXiv.2610.17523 Focus to learn more arXiv-issued DOI via DataCite (pending registration)
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