AI Helps US Treasury to Combat Financial Crime

New data shows that artificial intelligence has aided the U.S. Department of Treasury in analyzing data and recovering $1 billion worth of check fraud in the fiscal period of 2024. This is almost three times what the department has recovered in the 2023 fiscal year.

In a phone interview, a top official at the Treasury, Renata Miskell, noted that using artificial intelligence had been transformative. Miskell added that this had improved the department’s fraud prevention and detection game. The department also credited the tech with assisting officials in recovering and preventing over $4 billion worth of fraud overall in the same period. This is six times higher than figures from 2023.

Government officials began using artificial intelligence to identify financial crimes in 2022. Their objective was to protect taxpayer funds from fraud, which increased significantly during the coronavirus pandemic as the federal government worked to pay out aid to businesses and consumers.

It is important to note that Treasury isn’t using generative artificial intelligence but machine learning, which can analyze huge amounts of data then make forecasts and decisions based on its findings.

From the above, we see that artificial intelligence can help fight financial crime by detecting patterns in data, using a fraction of the time it’d take a human. Experts believe that training sophisticated artificial intelligence models will allow them to pick out suspicious transactions in milliseconds.

Miskell explained that AI helped the Treasury detect fraudsters’ anomalies and hidden patterns, working to prevent them. She also revealed that the department is exploring how it can adopt techniques to detect fraud that leading credit card firms and banks use. This is crucial for the department, one of the largest payers globally.

Annually, this department pays out roughly 1.4 billion payments valued at almost $7 trillion to 100 million individuals. The Treasury is responsible for delivering payments on everything, from federal worker paychecks, stimulus checks, and tax refunds to Medicaid and Social Security payments. This essential role makes the department a target for fraudsters focused on stealing funds from taxpayers.

This isn’t the only federal agency using AI in its operations either. In 2023, the Internal Revenue Service revealed that it’d utilized artificial intelligence in detecting tax cheats by examining returns from law firms, hedge funds, and others.

Estimates from Juniper Research expect that by 2028, fraud in online payments may exceed $362 billion, with some of the fraud being accelerated by artificial intelligence itself.

This end use of AI technology by the Treasury Department shows just one example of the applications of AI. Firms like C3.ai Inc. (NYSE: AI) are focused on addressing the artificial intelligence needs of diverse market segments, and the coming years could see the proliferation of these technologies in most aspects of life and work.

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