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The technology helped recover $1.3 billion in tax evasion in fiscal year 2024, according to the Treasury Department.
The U.S. Treasury Department has increased its focus on artificial intelligence (AI) to combat fraud, using the technology to stop $4 billion in fraudulent payments last year.
The agency announced the estimate in a press release Thursday, announcing the success of its “technology and data-driven approach.”
In fiscal year 2024, which runs from October 2023 to September 2024, the Treasury Department announced that it leveraged machine learning AI to stop $1 billion in check fraud.
At the same time, the company added that its AI processes helped eliminate $3 billion in other improper payments, including by accurately identifying risky transactions and improving vetting.
According to the agency, the total amount of fraud avoided for the year was $4 billion, six times more than the previous year.
Find “hidden patterns”
Treasury Department official Renata Mikel told CNN that while the use of AI technology has been “transformative” for the department, humans are still needed to make final decisions on label fraud.
“Scammers are very good at hiding. They’re secretly trying to game the system,” Miskell said. “The use of AI and data can help discover and prevent these hidden patterns and anomalies.”
The agency says the U.S. Treasury Department makes about 1.4 billion payments each year, totaling more than $6.9 trillion.
“We take seriously our responsibility to effectively manage taxpayer funds,” the agency said in a statement on fraud prevention.
“Helping agents ensure they pay the right amount, to the right person, at the right time, is at the heart of our efforts,” he added.
The Treasury Department isn’t the only U.S. government agency using AI to crack down on financial crimes. The Internal Revenue Service (IRS), which collects federal taxes, also uses the tool to combat tax evasion and plans to increase its auditing efforts in the coming years.
The IRS announced last month that it had recovered $1.3 billion from wealthy taxpayers since the end of 2023 as part of an effort to get high-income taxpayers back.
The IRS’s most recent estimates are that the amount owed and unpaid is approximately $496 billion each year (2014-2016). This tax gap is expected to widen to $688 billion in 2021, according to the U.S. General Accounting Office (GAO).
As AI increases its presence in the industry, regulators are warning that AI poses increased safety and soundness risks.
U.S. Treasury Secretary Janet Yellen, chair of the Financial Stability Oversight Council, said that by supporting responsible AI innovation, “the financial system can reap benefits such as improved efficiency, but it also reduces the existing risk management framework that must be applied.” There are also principles and rules.”
