Fraud costs the U.S. government anywhere between $233 billion to $521 billion annually. Government officials expect fraud activity to increase over the next two years many agencies to report increasingly sophisticated schemes. At the same time, the proportion of front-line government employees and investigators who feel confident they have the resources to fight fraud has dropped significantly, from 72 percent in 2022 to 59 percent in 2023.
Many agencies are coping with staff and budget constraints, which limits the capacity for oversight and makes pursuing anything outside the most expensive and obvious fraud schemes beyond their reach. Government teams need a force multiplier to equip themselves in the battle against fraudsters. Technology empowers investigators to prosecute more cases and obtain more convictions to deter future criminals.
Government Programs are a Target for Fraud
Government programs handle trillions of dollars, making them a lucrative target for fraudsters. For example, Medicare and Medicaid spending totaled $1.7 trillion in 2022 across 1.5 million institutional and individual providers. Medicare alone processes more than 1.1 billion claims. The massive number of transactions and institutional variety create opportunities for criminals to hide fraudulent activities, while the government’s quick payment process makes it a lucrative target.
Agencies face time and resource constraints in their investigations. Preparing and reconciling the significant evidence volume can take more than 90 percent of an investigator’s time, forcing teams to make difficult decisions about where to allocate limited resources. Court or agency deadlines loom. Cases stack up, and investigators must choose which are the highest priority. The limited bandwidth means many fraudsters are never held accountable for their crimes.
Increasing Investigative Capacity
Manually reviewing, sorting and reconciling financial data is not feasible with the size of government programs. Investigators need tools like AI-powered verified financial intelligence (VFI) software to streamline data prep, accelerate timelines and enhance analysis. This technology makes comprehensive visibility into all financial records possible.
These platforms extract data from banking evidence (statements, checks, deposit slips) – even without a template — and run quality assurance algorithms to verify the information. Then, VFI software reconciles the data, matching transfers between accounts and entities, identifying duplicate entries, categorizing transactions and flagging missing or inconsistent data. This task would typically take investigators weeks or months to complete on a limited dataset, but these solutions build a complete financial history in just hours.
The expedited preparation process increases investigators’ case capacity without adding resources.
Improving Evidence Quality
Data prepared by VFI platforms is precisely that — verified. The evidence meets rigorous court standards with its clear chain of custody and extensive QA processes. The comprehensive financial record means no data has been overlooked, increasing prosecutorial confidence and demonstrating the thoroughness of the investigation to stakeholders.
Instead of preparing the data, investigators can spend their time thoroughly analyzing it. VFI solutions flag discrepancies, such as missing statements, and provide visualizations to help identify unusual money movements that may go undetected by human review, allowing teams to scrutinize these instances and form their own conclusions. Visualization tools also support narrative building by illustrating money movement more effectively than a spreadsheet. These visual artifacts make compelling courtroom presentations that are complemented by an indexed report of every transaction tied back to banking evidence, in support of the prosecution’s case.
Greater investigative capacity and more robust investigations enabled by VFI technology will inevitably bring more fraudsters to justice, deterring other would-be criminals. The escalating threat of fraud demands an innovative and proactive approach. VFI tools empower agencies to fight back with the resources they have.
The author, Tod McDonald, CPA, CIRA, is the co-founder of Valid8 Financial.