AI helps the US Treasury bust fraudsters, saving billions.

The United States Treasury Department is increasingly relying on artificial intelligence (AI) to combat fraud, having used the technology to prevent $4 billion in fraudulent payments last year.

The estimate was presented in a press statement on Thursday, announcing the success of its "technology and data-driven approach.".

The Treasury employed machine-learning AI to block $1 billion in check fraud during fiscal year 2024, which ran from October 2023 to September 2024, according to the report.

Simultaneously, its AI systems helped weed out $3 billion in additional illegal payments, including by identifying at-risk transactions and enhancing screening, it claimed.



According to the government, overall yearly fraud prevention was $4 billion, six times greater than the previous year.

Discovering 'hidden patterns'
Renata Miskell, a Treasury official, told CNN that the use of AI technology has been "transformative" for the agency, which still relies on humans to make the final decision on classifying fraud.

"Fraudsters are quite excellent at hiding. "They're attempting to secretly game the system," Miskell explained. "AI and leveraging data helps us find those hidden patterns and anomalies and work to prevent them."

The US Treasury, the country's finance department, delivers over 1.4 billion payments per year, totaling more than $6.9 trillion, according to the agency.

In its statement on fraud prevention, the agency stated that it "takes seriously our responsibility to serve as effective custodians of taxpayer money.".

"Helping ensure that agencies pay the right person in the right amount at the right time is central to our efforts," according to the statement.

The Treasury is not the only US agency turning to AI to crack down on financial crime. The Internal Revenue Service (IRS), which collects federal taxes, is also leveraging the tool to fight tax fraud, with plans to use it to ramp up audits in the years ahead.

The IRS said last month that it had recovered $1.3 billion from wealthy taxpayers since late 2023, as part of efforts targeting the returns of high-income individuals.

IRS’s most recent estimate of the amount owed and not paid stands at about $496bn each year (for 2014-2016). That tax gap was expected to grow to $688 billion in 2021, according to the US Government Accountability Office (GAO).

As AI grows more prominent in the industry, regulators have warned that it raises safety and soundness risks.

US Treasury Secretary Janet Yellen, who chairs the Financial Stability Oversight Council, said supporting responsible AI innovation can allow the “financial system to reap benefits like increased efficiency, but there are also existing principles and rules for risk management that should be applied.”.