AI vs. Financial Crime: Balancing Innovation and Threat in the Fraud Prevention Race

By Dr. Radhakrishna B, Director – Customer Advisory, SAS

As financial crime evolves, it is imperative that the tools that are employed to fight against it have to evolve. With technological progress, Artificial Intelligence (AI) has emerged as a game-changer in combating fraud. It provides real-time monitoring and analysis, detection of anomalies, and profiling techniques. Unfortunately, while fraud fighters are utilising AI, so are the fraudsters who are using it to develop even more advanced ways of scamming people that even the best systems of today cannot detect.
AI has revolutionised the fight against financial crime and has enhanced the capabilities of both fraud prevention and fraudsters, who are increasingly leveraging AI to execute sophisticated schemes that are often difficult to detect using traditional methods.

The shift to real time AI-based monitoring
Organisations have moved on to AI-driven methods such as predictive analytics and automated anomaly detection and are able to respond to fraud in real time. For instance, a large public sector bank in India implemented SAS’ Enterprise Fraud Management system to cover multiple products, channels, and transactions throughout the customer lifecycle. By leveraging advanced analytics and automation, the system enabled real-time fraud detection and prevention. The SAS solution suite facilitated seamless integration with various channels and utilised AI/ML models to monitor and respond to potential fraud, ensuring minimal losses. The system’s ability to analyse and manage data across various streams transformed the bank’s fraud management program, enhancing resilience and ensuring customer trust.
The evolution of Gen AI also presents different risks – cybercrooks use deepfake technology to create synthetic identities, thus introducing fraud schemes into new channels, such as audio and video calls.
These sophisticated scams have fed a surge in account takeovers and authorised push payments frauds as victims unknowingly help execute these crimes. Financial institutions must adopt scalable AI solutions that can adapt to emerging threats and complement them with enterprise-wide fraud awareness programs and partnerships across industries that ensure a robust defense against AI-driven fraud.

Building Resilience with Collaboration
AI is not a one-off, standalone solution. Genuine fraud prevention requires coordinated attempts from financial institutions, regulatory bodies, and law enforcement. According to recent study by SAS and the Association of Certified Fraud Examiners (ACFE), 83% of anti-fraud professionals are planning to take Gen AI tools on board in the next two years. While fraudsters have no ethical constraints, fraud fighters have to work within regulations, highlighting the importance of ethical governance. Through building robust data ecosystems and using composite AI aligned to specific use cases, organisations can adapt to evolving threats.

AI offers unparalleled opportunities to enhance operational efficiency, improve customer experiences, and mitigate risk. The sooner AI is integrated into an organisation’s fraud prevention strategies, the better equipped it will be to ensure that human good prevails in the AI loop. Organisations that are aggressive in deciding to integrate ethical AI solutions and encourage collaboration will not only stay ahead of fraudsters but also create a safer and more resilient financial ecosystem for the future.