“Leveraging data has upped our game in fraud detection and prevention,” said Miskell.
The Treasury Department credited AI with helping authorities prevent and recover more than $4 billion in fraud in fiscal year 2024, a sixfold increase from the previous year.
US authorities quietly began using AI to detect financial crimes in late 2022, following the lead many banks and credit card companies already do to stop bad guys.
The goal is to protect taxpayer money against fraud, which increased during the Covid-19 pandemic, when the federal government struggled to disburse emergency aid to consumers and businesses.
It's clear that Treasury isn't using generative AI, the kind that has captivated users of OpenAI's ChatGPT and Google's Gemini by generating images, creating song lyrics, and answering complex questions (although it still sometimes 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 it has learned.
AI can be very useful in combating financial crime by sifting through near-infinite streams of data and detecting subtle patterns – all in a fraction of the time it would take a human to do so.
“Fraudsters are really good at hiding. They are secretly trying to game the system,” Miskell said. “AI and leveraging data help us find these hidden patterns and anomalies and work to prevent them.”
Each year, the Treasury delivers about 1.4 billion payments valued at nearly $7 trillion to 100 million people. It's responsible for sending out everything from Social Security and Medicaid payments to federal worker paychecks, tax refunds and stimulus checks.
US officials have expressed concern that AI will introduce new dangers into the financial system. Treasury Secretary Janet Yellen warned bankers in June that AI in finance poses “significant risks.”
That's nearly triple what the Treasury recovered in the previous fiscal year.
“It was really transformative,” Renata Miskell, a senior Treasury official, told CNN in a phone interview.
“Leveraging data has upped our game in fraud detection and prevention,” said Miskell.
The Treasury Department credited AI with helping authorities prevent and recover more than $4 billion in fraud in fiscal year 2024, a sixfold increase from the previous year.
US authorities quietly began using AI to detect financial crimes in late 2022, following the lead many banks and credit card companies already do to stop bad guys.
The goal is to protect taxpayer money against fraud, which increased during the Covid-19 pandemic, when the federal government struggled to disburse emergency aid to consumers and businesses.
It's clear that Treasury isn't using generative AI, the kind that has captivated users of OpenAI's ChatGPT and Google's Gemini by generating images, creating song lyrics, and answering complex questions (although it still sometimes 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 it has learned.
AI can be very useful in combating financial crime by sifting through near-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 sniff out suspicious transactions in mere milliseconds.
“Fraudsters are really good at hiding. They are secretly trying to game the system,” Miskell said. “AI and leveraging data help us find these hidden patterns and anomalies and work to prevent them.”
Each year, the Treasury delivers about 1.4 billion payments valued at nearly $7 trillion to 100 million people. It's responsible for sending out everything from Social Security and Medicaid payments to federal worker paychecks, tax refunds and stimulus checks.
Online payment fraud is expected to exceed $362 billion by 2028, according to estimates from Juniper Research.
And some of this fraud is being boosted by AI itself.
US officials have expressed concern that AI will introduce new dangers into the financial system. Treasury Secretary Janet Yellen warned bankers in June that AI in finance poses “significant risks.”