FundShield: A Preventive Fraud Control Framework for Digital Banking Transactions

The rapid digitization of financial services has enabled instant payments and seamless cross-border transactions, but it has also increased exposure to sophisticated fraud, including authorized push payment (APP) fraud and scams. Traditional fraud detection systems often operate reactively, allowing funds to be withdrawn before intervention is possible. This paper introduces FundShield, a conceptual multi-layered fraud prevention framework designed to enhance proactive control within digital payment ecosystems. FundShield integrates temporary fund-holding mechanisms and sender verification directly into the transaction lifecycle. High-risk transactions are routed to non-withdrawable accounts until explicit sender verification confirms legitimacy. A deterministic transaction state model ensures consistent fund containment, compliance, and auditability. Simulation-based evaluation demonstrates full containment under high-risk simulated scenarios, preventing unauthorized withdrawals during the containment window and improving cross-border recovery potential compared to detection-only approaches.