In recent years, generative AI has made for enabling high-profile deepfakes and impersonation scams.
Schneider Downs is proud to be an official supporting organization of International Fraud Awareness Week. To mark the 25th anniversary of International Fraud Awareness Week, we are releasing a series of content on how AI is reshaping the landscape of fraud detection and prevention. This article focuses on how to fight fraud with AI-powered tools.
Generative AI is providing bad actors with a powerful tool to refine and scale their efforts to compromise victim companies, individuals and governments for financial gain. Social engineering, business email compromise, forged documents and synthetic identity schemes are now even more compelling thanks to AI. But despite the onslaught of AI-fueled attacks, organizations are using the same emerging technologies to turn the tide. Fraud fighters are using AI tools to augment traditional internal controls to respond smarter and faster to fraud schemes and even prevent them from occurring in the first place.
The Rise of AI-Powered Defense
AI is no longer just a buzzword; it’s an integral part of a robust program of anti-fraud controls. From financial institutions to internal audit departments, organizations are deploying AI to detect anomalies, flag suspicious behavior and prevent fraud before it happens.
According to Business Insider, MasterCard is using AI to improve its automated fraud alerts to cardholders. MasterCard asserts AI has helped it refine its risk calculations and reduce false positives. Perhaps you’ve noticed a change in how your bank or credit card provider alerts you about suspicious transactions over the past few years.
AI systems like these analyze vast amounts of data in real time, like transaction patterns, device fingerprints and behavioral signals to identify subtle indicators of fraud that human analysts might miss. Unlike traditional rule-based systems, AI models continuously learn and adapt, improving accuracy and reducing false positives.
Real-World Applications
- Behavioral Analysis: AI models track user behavior across platforms to detect deviations that may signal fraud. For example, a sudden change in login location or spending habits can trigger an alert.
- Transaction and Accounting Entry Monitoring: As mentioned, MasterCard and other financial institutions are using AI to refine their approach to monitoring customer and cardholder transactions for suspicious activity, protecting them in the process. Likewise, this same approach can be applied to internal accounting records to automatically flag accounting entries that may exhibit suspicious attributes (e.g., round numbers, journal entries posted outside business hours, unusual combinations of accounts).
- Document and Identity Verification: AI tools now scrutinize IDs, credentials and transaction support for signs of manipulation and AI generation. As deepfake documents become more convincing, AI helps verify authenticity by analyzing shadows, textures and metadata.
No Replacement for Internal Controls
Despite its potential, AI is not and will never be a silver bullet. It’s another item in the toolbelt of fraud fighters. However, it’s no substitute for a robust system of internal controls. “Old school” controls like multiple approvals for large transactions, confirmation of vendor changes via secondary channels, ethics and fraud hotlines, and a strong ‘tone at the top’ will still make the difference between preventing fraud and falling victim to it.
How Can Schneider Downs Help?
At Schneider Downs, we have years of experience helping organizations respond to potential fraud and developing anti-fraud programs to catch fraud before it happens. If you have questions or concerns, contact a member of our team at [email protected].
This article is part of a series highlighting how AI is reshaping the landscape of fraud detection and prevention. Additional articles include:
About International Fraud Awareness Week
Since 2000, the Association of Certified Fraud Examiners has recognized the third week in November as International Fraud Awareness Week. With a focus on awareness, education and fostering a culture of integrity, International Fraud Awareness Week recognizes the importance of taking action in the fight against fraud. Learn more at FraudWeek.com.
About Schneider Downs Business Advisory
Our experienced team of business advisors, consisting of Certified Fraud Examiners (CFEs), a Master Analyst in Financial Forensics (MAFF), a Certified Forensic Interviewer (CFI), and Certified Mergers and Acquisition Advisors (CM&AAs), leverages their industry expertise to maximize value and minimize risk proactively or during acquisitions, fraud events, litigation, arbitration, corporate reorganization and other major business transactions and transitions. To learn more, visit our dedicated Business Advisory page.
