Reported by Benjamin Chou, President, Personable

Traditional methods of investigating financial fraud rely on manual verification and human analysis. Unfortunately, these methods often fall short when dealing with today’s increasingly complex and sophisticated fraud schemes. These shortcomings make it imperative to explore the transformative potential of artificial intelligence and machine learning for revolutionizing financial fraud investigations.

Forensic Accounting

Advanced technologies enable forensic accountants to uncover complex patterns and suspicious activities that would be challenging to identify using manual methods alone.

Let’s explore some specific patterns where AI can be instrumental:

• Structuring or smurfing: This technique involves a criminal depositing just under $10,000 into a bank account daily for several days. This strategy aims to evade the bank’s obligation to report transactions exceeding $10,000.

• Layering: In this approach, money is shifted between numerous accounts across various banks and countries, even converted into different currencies. This helps to hide the original source of funds and makes the tracing process more complex.

• Integration: In this stage, the launderer uses illegitimate funds to make expensive purchases, such as properties or luxury goods. This creates a false appearance of lawful wealth.

• Use of shell companies: These are companies created in offshore locations with relaxed regulations. They are used to open bank accounts, buy assets or conduct transactions, effectively hiding the actual ownership of the money.

• Trade-based laundering: This involves manipulating export prices to foreign buyers. This method allows the criminal to launder money while appearing to earn legitimate trade income.

Read full report: https://www.forbes.com/sites/forbestechcouncil/2023/07/03/the-digital-sentry-how-ai-will-revolutionize-financial-fraud-investigation/amp/