Treasury's AI-Powered Crackdown Recovers $375 Million Lost In Scams

Treasury's AI-Powered Crackdown Recovers $375 Million Lost In Scams
Cover Image Source: A seal on the exterior of the U.S. Department of Treasury Getty Images | Chip Somodevilla

The Treasury Department has been secretly tackling scammers, trying to steal money from taxpayers. Starting in 2022, it reportedly implemented enhanced fraud-detection methods powered by AI to spot fraud and the AI-fueled crackdown seems to be paying off. Treasury's fraud detection successfully recovered $375 million in fiscal 2023 alone. The metric was recently disclosed to CNN, marking the first time the Treasury spoke about it publicly.



 

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Using the strategies that till now were only being used in the private sector and banks, the Treasury is successfully checking frauds in real-time. Treasury also revealed that the use of AI in this strategy has been instrumental and has resulted in many arrests across cases.

A seal on the exterior of the U.S. Department of Treasury | Chip Somodevilla | Getty Images
A seal on the exterior of the U.S. Department of Treasury | Chip Somodevilla | Getty Images

The Treasury says that they are using the type of AI that falls under the umbrella of machine learning and Big Data and not generative AI. The goal of this initiative is to both flag and alert before the fraudulent checks are ever cashed. It's about time that the US government takes steps like these to combat the staggering numbers when it comes to scams. Fraud reportedly rose substantially during the Covid-19 pandemic. Scammers took advantage of the aid that was provided by the government to small businesses and families. Close to $135 billion was lost just in fraudulent Covid unemployment insurance claims, as per the US Government Accountability Office, and around $200 billion was lost in fraudulent Covid funds

Other metrics like the surge in check fraud which is up by 385% since the pandemic show how dire the situation is. This is a huge problem for both American citizens as well as the Treasury which is one of the biggest payers in the world. The Treasury reportedly sends out payments for over 300 federal agencies, mostly through electronic funds transfer, and sometimes via check. 

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"The Treasury Department is committed to safeguarding taxpayer dollars through payment integrity…and ensuring that Social Security payments, tax refunds and other types of checks, and the people who are receiving them, are safe from fraud," Deputy Secretary Wally Adeyemo said in a statement. "AI has allowed us to expedite the detection of fraud and recovery of tax dollars," via NextGov.

"We are using the latest technological advances to enhance our fraud-detection process, and AI has allowed us to expedite the detection of fraud and recovery of tax dollars," Deputy Treasury Secretary Wally Adeyemo said in a statement provided to CNN.

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According to Law firm Morgan Lewis, it's only AI that can identify and flag patterns in an "almost endless supply of data." "A well-trained AI is capable of identifying subtle patterns and connections in data that would be near impossible to be identified by humans," he tells CNN.



 

As mentioned, many private companies are working on ways to eliminate fraud. Recently, Mastercard announced that it has built an advanced generative AI model that is aimed at helping banks determine whether the transactions are legitimate. A team of leading regulators at The Financial Stability Oversight Council talked about how AI can both "spur innovation and drive efficiency" as well as introduce "certain risks" like privacy issues, per a CNN article.

We are living in a world where AI is both solving the problem as well as turbocharging it. It is pretty evident by now that AI can very well facilitate fraudulent activities, including automating scams and generating deepfakes, but with the correct implementation, it's also the only tool with which we can prevent fraud with high efficacy.

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