The United States Treasury Department is increasingly utilizing artificial intelligence (AI) to combat fraud, successfully preventing $4 billion in improper payments over the past year. In a press release on Thursday, the agency outlined the effectiveness of its "technology and data-driven approach. " For fiscal year 2024, which spans from October 2023 to September 2024, the Treasury reported that machine-learning AI halted $1 billion in check fraud. Additionally, its AI systems were instrumental in identifying $3 billion in other improper payments by detecting high-risk transactions and enhancing screening processes. The total annual fraud prevention amount of $4 billion was six times higher than what was recorded the previous year, according to the Treasury. Uncovering 'hidden patterns' According to Treasury official Renata Miskell, the integration of AI technology has been "transformative" for the agency, which still relies on human judgment to make the final determination regarding fraud classification. "Fraudsters are adept at concealing their activities. They aim to manipulate the system discreetly, " Miskell stated. "Using AI and analyzing data allows us to uncover those hidden patterns and anomalies, enabling us to prevent them. " Each year, the US Treasury, which manages the nation's finances, processes approximately 1. 4 billion payments totaling over $6. 9 trillion. In its fraud prevention statement, the agency emphasized its commitment to responsible stewardship of taxpayer funds. "Ensuring that agencies compensate the right individuals in the correct amounts and at the appropriate times is central to our mission, " it stated. The Treasury isn’t the only federal agency leveraging AI to address financial crime.

The Internal Revenue Service (IRS), responsible for collecting federal taxes, is also adopting this technology to combat tax fraud and intends to enhance audits in the coming years. Last month, the IRS announced it has recouped $1. 3 billion from affluent taxpayers since late 2023 as part of initiatives targeting high-income individuals’ tax returns. The IRS's latest estimation of unpaid taxes stands at approximately $496 billion annually (for the years 2014-2016). This tax gap is projected to rise to $688 billion in 2021, as indicated by the US Government Accountability Office (GAO). As AI becomes more prevalent in the sector, regulators have raised concerns about potential safety and soundness risks. US Treasury Secretary Janet Yellen, who leads the Financial Stability Oversight Council, highlighted that fostering responsible AI innovation can enable the financial system to experience benefits such as enhanced efficiency, while also underscoring the importance of adhering to existing risk management principles and regulations.