new York
CNN
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The federal government’s bet to use artificial intelligence to combat financial crime appears to be paying off.
Machine learning AI helped the U.S. Treasury Department sift through massive amounts of data and recover $1 billion in check fraud in fiscal year 2024 alone, according to new estimates shared first with CNN. That’s nearly triple what the Treasury took in the previous financial year.
“It’s really been transformative,” Renata Miskell, a senior Treasury official, told CNN in a telephone interview.
“Leveraging data has improved our performance in fraud detection and prevention,” Miskell said.
The Treasury Department credited AI with helping officials prevent and recover more than $4 billion in total fraud in fiscal year 2024, a six-fold increase from the previous year. previous year.
American officials quietly started using AI to detect financial crime in late 2022, building on what many banks and credit card companies are already doing to stop the bad guys.
The aim is to protect taxpayers’ money against fraud, which increased during the Covid-19 pandemic while the federal government hastened to provide emergency aid to consumers and businesses.
Certainly, the Treasury does not use generative AI, the kind that has captivated users of OpenAI’s ChatGPT and Google’s Gemini by generating images, developing song lyrics and answering complex questions (even if it is sometimes still necessary). struggles with simple queries).
Instead, fraud detection efforts rely on machine learning, the subset of AI that excels at analyzing large amounts of data and making decisions and predictions based on what she learned.
AI can be very useful in the fight against financial crime by analyzing almost infinite streams of data and detecting subtle patterns – all in a fraction of the time it would take a human to do so. Experts say that once sophisticated AI models are trained, they can detect suspicious transactions in just milliseconds.
“Fraudsters are very good at hiding. They’re trying to secretly game the system,” Miskell said. “AI and data mining help us find these hidden patterns and anomalies and prevent them. »
This is particularly crucial for the Treasury, which is among the largest payers on the planet, if not the largest.
Each year, Treasury makes about 1.4 billion payments valued at nearly $7 trillion to 100 million people. It’s responsible for sending everything from Social Security and Medicaid payments to federal workers’ paychecks, tax refunds and stimulus checks.
This essential role makes the Treasury a prime target for fraudsters seeking to steal from taxpayers.
Last year, the The Internal Revenue Service announced that it has deployed AI detect tax fraud by examining large and complex returns from hedge funds, law firms and others.
Online payment fraud is expected to exceed $362 billion by 2028, according to estimates from Juniper Research.
And part of this fraud is reinforced by AI itself.
In an infamous case earlier this year, Hong Kong police said a finance employee was tricked by deepfake video into paying $25 million to fraudsters.
U.S. officials have expressed concern that AI is introducing new dangers into the financial system. Treasury Secretary Janet Yellen in June the bankers have been warned that AI in finance presents “significant risks”.
Top regulators, led by Yellen, classified AI late last year as a “emerging vulnerability” to the financial system.
Miskell emphasized that even though AI systems flag suspicious transactions, “a human is always in the know” and federal agencies make the final decision on whether something constitutes fraud.
Treasury’s use of AI to combat financial crime is only just beginning.
Miskell said Treasury was studying how to adopt the fraud detection methods that major banks and credit card companies are deploying, declining to go into detail to avoid “exposing bad actors.”
A Treasury spokesperson told CNN the department is accelerating its work to improve fraud detection tools available to federal and state-administered programs. Authorities are testing new data sources to better detect fraud and questionable payments. team up with state agencies to combat unemployment insurance fraud.