Preventing public sector fraud

November 21, 2024

Business graph digital concept — © MF3d | iStock

Bala Kumar, CPTO at Jumio, advocates prevention over remediation to address public sector fraud in the future

Public sector fraud and spending errors cost the UK Government an estimated £33.2 billion to £58.8 billion in the first two years of the pandemic, absent of the £21 billion of fraud directly related to the pandemic response, as reported by National Audit Office – revealing just how vulnerable governmental systems can be in times of crisis.

While the pandemic accelerated the digital transformation of many public services, such as the HMRC’s income support service, these advancements also opened the floodgates for fraudsters to rapidly adapt and implement recent technological advances like artificial intelligence (AI) to exploit weaknesses in new digital infrastructures.

In recent years, fraudsters have undoubtedly become more sophisticated in their use of technology. Scammers are creating more credible schemes to convince victims to part with their money, generating more realistic data trails and documentation to cover their tracks. It’s clear that spending on reactive approaches alone won’t be sufficient.

Prevention must be front of mind if the public sector is to protect taxpayer money and maintain trust. Emerging technologies – especially AI, machine learning, and biometric verification – offer the capability to detect, block, and prevent fraud before it occurs. By prioritizing proactive measures, governments can stay ahead of increasingly sophisticated fraud tactics, protecting public resources.

Adapting to new threats: AI vs AI

The maturity and accessibility of AI tools make fraudsters’ attacks more sophisticated, automated, and scalable than ever before. Fraudsters are moving beyond the crudely crafted phishing attempts the public was used to and producing highly polished, convincing emails that impersonate legitimate organizations. This perceived authenticity has made it harder for individuals and even government systems to distinguish between fraudulent and authentic communications.

However, just as AI has been wielded as a weapon, it can also be a diligent defender against these new fraud tactics. Machine learning enables systems to process ever-growing datasets, flagging unusual behavior or patterns associated with fraudulent activity. By continuously learning from these patterns, AI-driven models will grow in their ability to detect new fraud techniques, so governments can keep pace with constantly innovating criminals. With AI, fraud detection happens in real-time, narrowing the window of opportunity for fraudsters to exploit weaknesses they might find and correct them before more can follow.

In the battle between fraudsters and would-be victims, AI is both the problem and the solution. However, targeted adoption of certain technologies can help governments build more resilient defenses that outpace fraudsters, deploying and refining AI as a strategic tool to stay ahead of criminal innovation.

Biometrics and digital identity verification

Government agencies are under greater pressure than ever to prevent identity fraud and provide their constituents with a secure yet efficient experience. The right technologies – artificial intelligence, machine learning, identity verification, biometric authentication, and liveness detection – all help improve public service security and quality. This starts with identity verification and liveness detection, to ensure that the person opening an online account on a government portal is who they say they are and is physically present during the onboarding process. Biometric authentication helps ensure that the person who signs into that account is the same person who signed up.

These methods go hand in hand and introduce hurdles for fraudsters that hamper the scale and speed of their campaigns. They also protect government benefits that are vulnerable to online fraud and identity theft. They also offer a robust alternative to inadequate tactics, such as passwords and knowledge-based questions.

The future is bright for public sector fraud prevention

As the UK Government shifts its AI investment strategy to prioritize public sector adoption of the technology, these preventative approaches toward combating fraud are clearly becoming a priority.

Discovery projects planned for 2024-25 aim to explore how AI and machine learning can be better integrated into fraud detection, demonstrating an awareness amongst the government to keep pace with fraudsters.

Collaborative efforts between the public and private sectors are also crucial. They ensure that fraud detection technologies can be shared, refined, and introduced effectively across all levels of government and standardized alongside private sector efforts to protect against the same methods of fraud.

The public sector can stay agile and adapt to new fraud tactics in real-time by using AI, machine learning, and biometrics. These technologies are key to building resilience in the ongoing fight against fraud.