Treasury Department Leverages AI to Save Billions in Taxpayer Money

The U.S. Treasury Department has announced a major win in its fight against fraud, crediting AI for helping to save billions of taxpayer dollars. In a statement released Thursday, officials reported that the department’s increased use of AI in fraud detection has prevented or recovered more than $4 billion over the past year.

By adopting advanced machine learning techniques, which analyze vast amounts of data to spot fraudulent patterns, the Treasury Department is taking a significant step in safeguarding public funds. Machine learning allows for more precise identification of suspicious activity.

In turn, helping to stem the tide of fraud that has surged since the pandemic.

Major Savings

The Treasury Department highlighted three key areas where AI has delivered substantial savings:

• $2.5 billion was saved by identifying and stopping high-risk transactions before they could be completed.
• $1 billion was recovered from check fraud schemes that targeted government funds.
• $500 million was saved through enhanced “risk-based” screening techniques

Deputy Secretary of the Treasury Wally Adeyemo emphasized the importance of the department’s AI-driven efforts. “Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money,” Adeyemo stated. “Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts.”

Expanding AI’s Reach

While the Treasury Department is keeping the specific details of its AI strategies confidential, officials said the department intends to share resources and insights with other federal agencies to expand the use of AI in fraud detection.

The need for AI-driven fraud prevention is urgent. According to UK-based consultancy Juniper Research, online payment fraud is expected to surpass $362 billion by 2028. In addition, check fraud in the U.S. has seen a 385% surge since the COVID-19 pandemic.

Recent data from the Treasury Department revealed that suspicious activity linked to check fraud totaled $688 million between February and August 2023.

A Broader Trend

The Treasury Department is not alone in turning to AI to tackle fraud. The Internal Revenue Service (IRS) has also embraced the technology. Last year, the IRS ramped up its use of AI to detect tax evasion, identify compliance risks, and enhance case selection tools, reducing unnecessary audits that often burden taxpayers.

Both the Treasury and the IRS are demonstrating how AI can be a powerful tool in protecting public funds and ensuring financial efficiency. As fraud continues to evolve, the U.S. government’s adoption of cutting-edge technology will be essential in keeping ahead of criminal activity and safeguarding taxpayer dollars.