Knowledge Sharing via Domain Adaptation in Customs Fraud Detection

Abstract

Knowledge of the changing traffc is critical in risk management. Customs offces worldwide have traditionally relied on local resources to accumulate knowledge and detect tax fraud. This naturally poses countries with weak infrastructure to become tax havens of potentially illicit trades. The current paper proposes DAS, a memory bank platform to facilitate knowledge sharing across multi-national customs administrations to support each other. We propose a domain adaptation method to share transferable knowledge of frauds as prototypes while safeguarding the local trade information. Data encompassing over 8 million import declarations have been used to test the feasibility of this new system, which shows that participating countries may beneft up to 2–11 times in fraud detection with the help of shared knowledge. We discuss implications for substantial tax revenue potential and strengthened policy against illicit trades.