Check fraud has increased nationwide by 385% since the pandemic. In response, the U.S. Department of the Treasury’s Office of Payment Integrity (OPI) implemented an enhanced process that uses Artificial Intelligence (AI) to mitigate check fraud in near real-time. With the new process, which strengthens and expedites recovery of potentially fraudulent payments from financial institutions, the Treasury Department recovered over $375 million in Fiscal Year 2023.
“The Treasury Department is committed to safeguarding taxpayer dollars through payment integrity – paying the right person, in the right amount, at the right time, and ensuring that Social Security payments, tax refunds, and other types of checks, and people who are receiving them, are safe from fraud,” said Deputy Secretary of the Treasury Wally Adeyemo. “We are using the latest technological advances to enhance our fraud detection process, and AI has allowed us to expedite the detection of fraud and recovery of tax dollars.”
In 2021, financial institutions filed over 350,000 Suspicious Activity Reports (SARs) to the Financial Crimes Enforcement Network (FinCEN) to report potential check fraud. This represented a 23% increase over the number of check fraud-related SARs filed in 2020. The upward trend continued into 2022, when the number of SARs related to check fraud reached over 680,000, nearly double from the previous year’s filings. Incidents of Treasury check fraud are also on the rise. The enhanced AI process and OPI’s partnership with federal law enforcement agencies have led to multiple active cases and arrests with law enforcement.
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