Using AI to fight fraud is paying off, Treasury says

The Treasury Department has recovered over $375 million since it started a new AI-powered fraud detection process in late 2022. 

Specifically, the new tool is meant to address check fraud — which the department says has skyrocketed since the start of the pandemic — by looking for abnormalities and helping to alert banks before fraudulent checks are cashed, the department told CNN.

The number of suspicious activity reports related to check fraud nearly doubled between 2021 and 2022, when there were 680,000 check fraud-related SARS filed, according to Treasury.

Early last year, the Financial Crimes Enforcement Network issued an alert about the surging numbers of fraudsters targeting mail to obtain and then manipulate checks. 

The department says that fraud is also increasing for checks sent by Treasury itself.

The Treasury Department sends out payments for over 300 federal agencies, mostly via electronic funds transfer, but also at times via check, it says. Those payments include benefits like tax refunds and Social Security.

The Bureau of Fiscal Service’s Office of Payment Integrity set up the new AI-fueled checks, which the department says can scan for check fraud almost in real-time and speed up the recovery of potentially fraudulent payments from financial institutions. 

“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.”

The department says that between the new AI process and the office’s partnership with federal law enforcement agencies, there are already active cases and arrests.

Treasury did not immediately respond to questions for this story