U.S. Treasury's AI-Powered Fraud Detection System Recovers Billions in 2024

AI Becomes Uncle Sam's Super Sleuth | PYMNTS.com

The U.S. Treasury Department's artificial intelligence system may be starting to do what armies of auditors have long struggled to achieve: curb financial crime more effectively. According to Treasury officials, a detection system, powered in part by AI, has saved taxpayers $3.8 billion in its first year by freezing suspicious transactions and clawing back ill-gotten payments. Now, businesses are racing to replicate this success, marking a significant moment in the fight against financial fraud. "With the right partners, the government will undoubtedly be successful in fraud prevention using AI -- there are already many examples of such successes," Shree Taylor, VP of Data Analytics and Innovation at Elder Research, told PYMNTS. "Other entities in the commercial and financial sectors are also experiencing the benefits of implementing an AI-driven fraud detection system. The silver bullet is having the right workforce to develop and support a comprehensive fraud detection program." Under the new program, the Treasury now uses expanded screening to spot threats early and focus on risky transactions. It has added AI to detect check fraud faster and improved payment schedules to reduce losses. Experts say private business owners can draw lessons from the Treasury example. AI-driven fraud detection systems can operate continuously, providing global coverage 24/7, 365 days a year, allowing businesses to adapt swiftly to prevent financial losses and enhance security in commercial transactions, Vall Herard, CEO of risk management firm Saifr, told PYMNTS. "By incorporating both structured and unstructured data analysis, including sanctions lists, watchlists, Most Wanted lists, news articles, social media posts and customer communications, these systems can detect potential fraud indicators that conventional methods might miss," he added. While AI can effectively prevent fraud, it's not always used. Herard said the financial sector is traditionally conservative, with compliance teams often resistant to significant changes in their risk management systems. "These systems, developed and refined over the years, are thoroughly tested and generally effective, leading to a cautious approach when it comes to adopting new technologies," he added. "There's a prevailing uncertainty about how regulators might view the transition to AI solutions, which further dampens enthusiasm for rapid adoption." Herard said the Treasury Department's success with AI in fraud prevention suggests that the government might be ahead of businesses in using AI in some ways. "This advanced position implies regulators might be more savvy than anticipated in evaluating AI technologies," he added. "If a government organization demonstrates the effectiveness and reliability of AI in this critical area, it could significantly bolster confidence among financial institutions. This governmental seal of approval, coupled with regulators' apparent sophistication in AI assessment, would likely make firms much more comfortable becoming fast followers, potentially accelerating the adoption of AI technologies across the commerce and financial sectors." As the technology advances, AI-powered fraud detection systems will likely improve their ability to analyze patterns and spot risks in real time while keeping users' payments smooth, Herard said. These technologies can process more data and catch subtle fraud signals that humans often miss. "However, the future of AI in payment fraud detection isn't just about more sophisticated algorithms," he added. "It's also about creating ecosystems where different AI models can work together seamlessly. For instance, we might see the development of AI agents that can autonomously orchestrate complex fraud detection workflows, pulling in data from various sources and coordinating different analytical models as needed. This approach could significantly enhance the ability to detect and respond to emerging fraud tactics, improving efficiency and reducing the burden on human analysts." Shaun Barry, Global Director of Risk, Fraud and Compliance at data and AI company SAS, told PYMNTS that fraud detection is becoming a differentiator for online payment systems. "AI is making sure that fraud detection happens in near-real time and is part of any core operational payment system," he added. "In fact, those firms that have the best fraud detection capabilities will be more profitable and have higher customer satisfaction than those who fail to innovate. The best-in-class firms will go even further, using AI to assess customer friction related to fraud detection and balancing the two to optimize the customer experience."

US Treasury claims to have won back billions of dollars lost to fraud using AI

The US Treasury has announced machine learning AI is being used as part of its fraud detection process, helping it save a record amount of money for the department. Through this, the department claims to have recovered over $4 billion in improper payments, and $1 billion of that is said to be as a direct result of the machine learning AI that identifies likely instances of check fraud. Also included, the department claims to have prevented $2.5 billion by identifying and prioritizing high risk transactions, and by expanding risk-based screening which resulted in $500 million in prevention. Government departments across the country are adopting AI in their processes. For example, the Nevada state employment department is using AI in the benefit appeals process, which critics say could be less effective but just as time consuming. Recent reports have revealed AI has made financial fraud significantly easier, so using AI to combat criminals does seem to be the natural next step. "Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money. Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts," said Deputy Secretary of the Treasury Wally Adeyemo. The AI process are likely inspired by similar fraud detection used in the banking industry, which the Treasury department has been quietly utilising for the last two years. This is likely to be just the start of a new era of machine bureaucracy, as the Treasury and Department of Labor announced a data-sharing partnership, "We will continue to partner with others in the federal government to equip them with the necessary tools, data, and expertise they need to stop improper payments and fraud." added Adeyemo.

Machine Learning AI Helped Detect $4 Billion Worth of Fraud in 2024, Says US Treasury - Decrypt

Machine learning AI has helped the U.S. Department of the Treasury prevented and recover more than $4 billion in fraudulent or improper payments during 2024. The sharp rise represents a six-fold increase from last year, when the Treasury detected and recovered $652.7 million. The Treasury's Office of Payment Integrity (OPI), part of the Bureau of the Fiscal Service, said in a report it's been using "machine learning AI" to detect high-risk transactions and expedite the identification of check fraud. "Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money," Deputy Secretary of the Treasury Wally Adeyemo said in a press release. "Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts." With online payment fraud expected to exceed $362 billion by 2028, Adeyemo said the Treasury would continue partnering with other federal agencies to provide the tools and data needed to combat fraud effectively. According to the U.S. Treasury, AI models helped identify high-risk transactions, preventing $2.5 billion in fraud, while Treasury's check fraud detection systems facilitated the recovery of $1 billion. The press release states the Treasury also implemented efficiencies in its payment processing schedules, preventing $180 million in improper payments, and expanded risk-based screening methods that blocked $500 million in potential fraud. ELNA.ai founder Arun PM told Decrypt, "AI systems, if not properly designed and maintained, are vulnerable to risks like overfitting, hallucinations, and flawed judgment, which could lead to harmful outcomes." "Fraud prevention is a global issue, and the impact of AI could be significantly amplified if its benefits were made more publicly accessible," Arun said. In May, the Treasury teamed up with the Department of Labor, enabling state unemployment agencies to access the Do Not Pay Working System via the Unemployment Insurance Integrity Data Hub. Established under the Payment Integrity Information Act of 2019, the Do Not Pay Working System (DNP) is a centralized platform managed by the U.S. Treasury's Bureau of the Fiscal Service, designed to prevent improper payments by streamlining data verification for federal agencies. Through the DNP portal, agencies can access multiple databases to confirm recipient eligibility before sending funds. The agencies say it reduces the risk of errors, like duplicate payments or payments to ineligible vendors. The Treasury's AI push places it alongside other federal heavyweights tapping into the tech. The IRS has been running machine learning models since last year to sniff out tax dodgers among the wealthy, while NOAA rolled out neural networks in 2024 to fine-tune hurricane predictions and deliver real-time alerts across multiple languages.

US Treasury: AI Helped Recover and Prevent $4 Billion-Plus in Fraud | PYMNTS.com

The U.S. Treasury Department said artificial intelligence (AI) has helped fuel a fraud/improper payments recovery. The department announced Thursday that its "technology and data-driven" approach allowed it to prevent and recover more than $4 billion in fraud and improper payments, up from $652 million during 2023. "This increase reflects dedicated efforts by the Treasury's Office of Payment Integrity, within the Bureau of the Fiscal Service to enhance its fraud prevention capabilities and expand offerings to new and existing customers," the department said in a news release. A breakdown of the effort shows that expanded risk-based screening helped prevent $500 million in fraud/improper payments, while identifying and prioritizing high-risk transactions led to another $2.5 billion in prevention. Meanwhile, the use of AI and machine learning in identifying check fraud helped the department recover $1 billion, while implementing efficiencies in the payment processing schedule led to another $180 million in prevention. "As the federal government's central disbursing agency, Treasury securely disburses approximately 1.4 billion payments valued at over $6.9 trillion dollars to more than 100 million people annually," the release said. "At a time when losses from fraud in the financial sector continue to rise every year, with online payment fraud expected to cumulatively surpass $362 billion by 2028, Treasury is uniquely positioned to support federal programs proactively mitigate the risk of financial fraud by leveraging data and emerging technologies." And as PYMNTS wrote Thursday, fraudsters are ruthless, so much so that they'll post as phony charity organizations or create new identities to apply for aid meant for the legitimate victims of the two recent hurricanes that have struck the American Southeast. To combat these crimes, that report said, financial institutions need a new mindset, one beyond the world where "good enough" fraud defense and identity verification is OK. As Bledsoe said, "We're in a perpetual arms race with the fraudsters. And when we build a higher fence, they build a higher ladder."

US Treasury used AI to recover $4 billion in fraud over past year

The United States Department of Treasury said it used artificial intelligence to sift through data and recover $4 billion in "fraud and improper payments" in the 2024 fiscal year. The Treasury said on Oct. 17, that its uptake of AI saw it recover nearly four times as much compared to the previous fiscal year, where it recovered $652.7 million in fraud. The Treasury started quietly using machine learning AI in late 2022 -- a type of technology that specializes in analyzing vast amounts of data, and making decisions and predictions based on what it has learned. "It's really been transformative," said Treasury official Renata Miskell, who told CNN that "leveraging data has upped our game in fraud detection and prevention." "Fraudsters are really good at hiding. They're trying to secretly game the system. AI and leveraging data helps us find those hidden patterns and anomalies and work to prevent them." Deputy Secretary of the Treasury Wally Adeyemo said that the agency "takes seriously our responsibility to serve as effective stewards of taxpayer money." Related: AI deepfake tool on 'new level' at bypassing crypto exchange KYC: Report Juniper Research reported that online payment fraud is expected to cumulatively surpass $362 billion by 2028. The Treasury currently handles around 1.4 billion payments annually with a total value of $6.9 trillion. In May, the Treasury said that it would expand the use of AI to enhance government regulatory and enforcement efforts against financial crimes. It is not the only US department turning to AI. In September 2023, the Internal Revenue Service said that had deployed AI to detect tax cheats by examining large and complex returns from hedge funds and law firms.

The US Treasury is using AI (a vehicle for fraud) to detect fraud

AI has been used to defraud people through everything from calling voters to faking celebrity giveaways. Now, the US Treasury Department claims machine learning AI has played a critical part in its enhanced fraud detection processes over the past year -- if a broken clock can be right twice a day, maybe AI can do something good one time? In a new release, the Treasury states it prevented and recovered "fraud and improper payments" worth over $4 billion over the last fiscal year (October 2023 to September 2024). This number represents a tremendous increase from the previous year, which reached just $652.7 million. One-fourth of the $4 billion apparently comes from recovery by "expediting the identification of Treasury check fraud with machine learning AI." Again, does it feel a bit like making a deal with the devil? Yes. But, such is 2024. The $1 billion comes alongside $2.5 billion in prevention from "identifying and prioritizing high-risk transactions" and another $680 million toward additional prevention techniques. The Treasury plans to share the technology with other federal agencies, though some have already implemented their own. The IRS, for example, has taken steps to use AI to find tax evaders, automate services and conduct audits.

Treasury Department uses AI to recover $1 billion in fraud

The Treasury Department is taking advantage of artificial intelligence (AI) to prevent or recover check fraud and stopped more than $1 billion in fraudulent payments over the past year, the agency announced Thursday. Machine learning AI was used by the Treasury Department to recover about $1 billion in check fraud in fiscal 2024, the agency said in a press release. The increased use of AI was part of various enhanced fraud detection processes the department rolled out over the fiscal year. The enhanced measures helped prevent or recover more than $4 billion total in fraud, according to the agency. The machine-learning algorithms processed and learned with mass amounts of data to help the Treasury Department more easily flag potential fraud schemes. The department declined to share specific examples, citing the nature of the operations. The total amount of fraud recovered or prevented also included $2.5 billion by identifying and preventing high-risk transactions, $500 million through expanded "risk-based" screenings and $180 million through increasing the efficiency of payment processing schedules. "Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money. Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts," Deputy Treasury Secretary Wally Adeyemo said in a statement. Online payment fraud is expected to surpass $362 billion by 2028, the Treasury Department stated, citing findings from Juniper Research. The Treasury Department's embrace of AI follows a similar move by the IRS, which launched an initiative last year using the new technology to crack down on back taxes. In this case, AI technology can discover patterns of tax avoidance more easily than before.

US Treasury Used AI to Uncover $4 Billion Fraud: Here's How | CoinGape

AI has grown from just a source of entertainment to helping the US Treasury in solving money frauds and other related crimes. US Treasury has been in a constant battle with the rising crimes around money fraud. In general, money laundering, tax invasions, thefts, and many similar crimes involve complex structures, where reviewers have to go through hundreds and thousands of transactions and reports to figure out illegal activity. However, with Artificial Intelligence, this process is way smoother. With AI and a data-driven approach, the official has recently uncovered $4B in frauds. It is also important, as the Federal Government Accountability Office estimated that these federal agencies lose around $233-$521B in such fraud. This creates a need to leverage data analytics in the identification and prevention of such crimes. In the last few years, Artificial Intelligence's usage has grown exponentially due to its high threshold and capability. Its impact is also visible in the cryptocurrency, where the A16zcrypto crypto report, revealed that 35% of the projects are implementing this technology. Not the forget, the demand for AI tokens has blossomed in the crypto industry. Its most beneficial property, analyzing data, is used in hundreds of fields, and the US Treasury is one of its users. Recently, they used AI to study and reveal many hidden patterns and financial crimes. With a US Treasury press release, the official revealed that the U.S. Department of Treasury has put high efforts into involving this technology. Here, Artificial Intelligence played a major role in identifying fraud, prevention, and recovery. The team has reported that in this fiscal year (September 2023-September 2024), they have recovered more than $4 Billion in money-related frauds and improper payments. In this, $1B was halted in the cheque fraud, and the remaining $3B was from the improper payments. The announcement breakdown also revealed the prevention of $500 million in fraud/improper payments. Additionally, the team prioritized identifying high-risk transactions, which helped them in preventing another $2.5B. However, this is not happening for the first time, as the Treasury has been quietly using the technology since 2022. It took a long time to train the system and efficiently analyze these frauds, but the outcome was impressive. The announcement claimed that they had recovered six times the number of the previous year, which was $652.7 million. The US Treasury Official, Renata Miskell, also came forward, calling this experience transformative, where 'leveraging the data upped their game in fraud detection and prevention. Fraudsters are good at hiding. They're trying to secretly game the system," Miskell said. "AI and leveraging data helps us find those hidden patterns and anomalies and work to prevent them. Internal Revenue Service (IRS), the US's tax collection agency, which is responsible for enforcing tax laws, collecting taxes, and much more, is taking advantage of artificial Intelligence to crack down on tax frauds. This revelation came after the IRS recovered $1.3B from rich taxpayers. Additionally, a separate report claims that such taxpayers owe $496B every year. With such high dues, the IRS is planning to continue using AI to fight tax fraud in the future and also for audits. Artificial Intelligence is the new norm in every industry, including crypto. Now, its features and capabilities are improving with the world leaders watch. Besides, the US Treasury has positioned itself to reduce the risk of these financial frauds with the help of AI. Though it already disburses around 1.4B payments ($5.9 Trillion), the official has acknowledged the rising criminal activities, as they believe the online payment-related frauds can rise to $362 Billion by 2028, requiring implementation of such advanced technology.

US Treasury Taps AI to Catch Criminals Stealing $4 Billion of Your Taxes

The US Treasury Department says AI tools prevented criminals from stealing $4 billion in taxpayer dollars this year, a dramatic increase from $653 million last year. The tools have been "transformative," Renata Miskell, a top Treasury official, tells CNN. They don't use generative AI, like ChatGPT, but rather are machine learning-based. They're helping identify high-risk transactions, expedite check fraud, implement efficiencies, and expand risk-based screenings. The Treasury is a prime target for financial fraud because it doles out huge sums of cash every year for Social Security, Medicaid, tax refunds, federal paychecks, and stimulus checks. The much-needed technology upgrade is helping plug gaps in the system, using techniques already in use by leading banks and credit card companies. "Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money," says Deputy Secretary of the Treasury Wally Adeyemo. "Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts." Since the pandemic, fraud and improper payments have been on the rise. The IRS is still investigating an estimated $9 billion in fraud cases related to pandemic-era stimulus checks and loans. Online payment fraud is an ongoing issue, with losses expected to pass $362 billion by 2028. The Treasury says it is "uniquely positioned" to support government-wide efforts to mitigate financial fraud with its new technology. In May 2024, it announced a data-sharing partnership with the Department of Labor to provide state unemployment agencies with a more robust system. "We will continue to partner with others in the federal government to equip them with the necessary tools, data, and expertise they need to stop improper payments and fraud," says Adeyemo. The IRS is also scaling up its use of AI, and in 2023 debuted a new system to identify high income earners and wealthy corporations evading taxes.

Treasury Department now using AI to save taxpayers billions

The U.S. Treasury Department building in Washington, D.C.Stefani Reynolds / Bloomberg via Getty Images file The latest benefit from the artificial intelligence revolution: saving American taxpayers billions of dollars. The U.S. Treasury Department said its increased use of artificial intelligence in fraud detection helped prevent or recover more than $4 billion over the past year. In a release Thursday, Treasury officials said it had been leaning especially into machine learning, which involves analyzing large quantities of data, to detect patterns of fraud commonly used by criminals. The results: "Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money, Deputy Secretary of the Treasury Wally Adeyemo said in a statement. "Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts." A Treasury official declined to provide specific examples of how AI had been deployed, given the nature of the activities targeted. The Department said it plans to lend resources and lessons-learned from its AI efforts to other federal agencies. Online payment fraud is set to cumulatively surpass $362 billion by 2028, according to UK-based consultancy Juniper Research. Already, check fraud in the U.S. has surged by 385% since the pandemic, according to Treasury. Check fraud, whether involving government or privately issued funds, continues to proliferate, with an estimated $688 million in reported suspicious activity filed by chartered banks between February and August 2023. Treasury joins the Internal Revenue Service in tapping into improved technology to create fiscal gains. Last year, the IRS announced it had begun increasing deployment of AI to better detect tax cheats, identify compliance threats, and improve case selection tools "to avoid burdening taxpayers with needless 'no-change' audits."