The US Treasury Department Says AI Tools Prevented Fraud Operations Worth One Billion Dollars in 2024
The US Treasury Department says its expanded use of artificial intelligence systems helped discover and prevent fraudulent payments totaling billions of dollars in 2024.
The Treasury is the check writer for numerous federal programs and processes approximately 1.4 billion payments worth $6.9 trillion annually for programs such as Social Security and medical assistance.
During the last fiscal year, which ended in September, the agency’s new data-driven approach resulted in preventing and recovering over $4 billion in fraudulent payments, according to a press release. This represents an increase of more than six times from the $652.7 million in fraudulent payments discovered or recovered during fiscal year 2023.
The agency attributed this increase to its new data-driven approach to fraud detection. This includes using artificial intelligence to identify fraud cases and prioritize high-risk transactions for further investigation. The Treasury also entered into partnerships with other federal agencies and government entities to exchange information through the “Do Not Pay” database and other payment safety tools.
“The Treasury takes our responsibility as effective stewards of taxpayer dollars seriously. Helping ensure agencies pay the right amount to the right person at the right time is critical to our efforts,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “We made significant progress over the past year in preventing over $4 billion in fraudulent and improper payments. We will continue to partner with others in the federal government to provide them with the necessary tools, data, and expertise they need to stop improper payments and fraud.”
While preventing or recovering $4 billion in fraudulent payments is not a small amount, it pales in comparison to the government’s estimates of the scale of fraud occurring.
In April, the Government Accountability Office estimated that federal agencies lose between $233 billion and $521 billion annually due to fraud. The GAO report recommended that the Treasury Department, due to its central role in processing payments, enhance data analysis tools more effectively.
Both government agencies and financial institutions are increasingly relying on artificial intelligence algorithms to identify fraudulent actors. These systems use a wide range of data about payment recipients – including details about their bank accounts, physical addresses, IP addresses, demographic information, usernames, and passwords – to identify patterns associated with fraud.
As the Treasury Department has noted in previous reports on fraud in the financial sector, this type of “historical data used to train fraud detection models may contain biases, such as an overrepresentation of certain population categories in fraud prevention efforts.”
