US Treasury says that AI has made financial fraud easier than ever

 Close-up hands counting money American dollars.
Close-up hands counting money American dollars.

The US Treasury department has said that AI is making it easier than ever for criminals to commit fraud against financial firms.

The warning echoes those of the Consumer Financial Protection Bureau, Federal Reserve, and Securities and Exchange Commission, who have also highlighted the risk AI poses to the financial industry.

AI tools have been a game changer, particularly for phishing, as it allows malicious actors to write convincing emails with proper grammar and spelling - even across languages.

Information sharing can combat fraud

Malicious actors are increasingly turning to AI to help perfect their attacks, and the ability to artificially generate voice and video has pushed impersonation to new heights. In the report submitted by the Treasury, Under Secretary for Domestic Finance, Nellie Liang, said, “Artificial intelligence is redefining cybersecurity and fraud in the financial services sector.”

Efforts to control the rise in fraud targeting financial firms have seen limited success due to the lack of established tools for combating these attacks, however the Biden administration has said that it will use cutting edge technologies to help firms identity and prevent fraud.

One concern highlighted in the report is that of “regulatory fragmentation” as federal and state agencies establish different rules and regulations governing AI. The Biden administration has put forward several executive orders on regulating AI, however state-level regulation is only just getting off the ground.

A further concern is that smaller firms without the funding or manpower to leverage complex and expensive fraud detection systems may fall victim to AI assisted fraud at a higher rate, prompting the American Bankers Association to put together an information sharing plan, whereby firms can share the intricate details on the fraud threats they have faced.

Via Bloomberg

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