124 Microsoft’s Valentina Ion explains why AI plays a critical role in helping public finance organisations transform operations and deliver citizen-focused services while driving productivity and efficiency BY REBECCA GIBSON Reported fraud, ineligible claims and errors cost US taxpayers up to $521 billion per year, according to estimates from the US Government Accountability Office. Meanwhile, figures from the European Public Prosecutor’s Office suggests countries in the European Union lost around €13 billion ($15 billion) to public finance fraud in 2024. And the National Audit Office approximates losses were between £55 billion ($73 billion) and £81 billion ($108 billion) from 2023 to 2024 in the UK. However, the true cost of tax evasion is likely being vastly underestimated, as fraudulent behaviour often goes undetected and unreported. With public finance budgets being squeezed and the cost of living rising, it’s vital for public finance organisations to find new ways to mitigate fraud and corruption. Many are arming themselves with AI. “Organisations can use AI to collate data from traditionally siloed, disconnected sources to build a 360-degree view of individual taxpayers and analyse their behavioural patterns and historic transactions to create accurate risk profiles,” says Valentina Ion, global public finance and social services lead at Microsoft. “These insights also allow them to rapidly identify abnormalities that may indicate errors, fraud or tax evasion, so they can proactively address these issues and reduce revenue loss.” The Inter-American Center of Tax Administrations (CIAT), for example, has co-developed the e-Invoicing Anomaly Detection Solution Accelerator (e-IAD) with Microsoft to help national tax agencies in its 42 member countries enhance electronic invoicing and reduce tax fraud and evasion. Powered by Microsoft Azure, e-IAD uses AI, machine learning and advanced analytics to automatically scrutinise taxpayer behaviour and analyse data from multiple sources to detect anomalies, validation errors or fraud in tax declaration forms and the e-invoicing process. The solution also provides personalised guidance to auditors, allowing them to make faster and better-informed decisions and optimise resource allocation. e-IAD, which can be scaled as tax regulations change and agency needs evolve, was successfully piloted by Costa Rica’s Ministry of Finance and is being rolled out to national tax agencies in three additional CIAT member countries. Fighting fraud is just one of the ways AI can help public finance organisations transform their operational processes FEATURE turns to Public AI finance
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