AI-powered governments better positioned to combat AI-driven fraud, study finds

A study published Tuesday by the software firm SAS Institute reveals that government agencies are increasingly vulnerable to fraud, particularly as criminals use advanced technologies like generative artificial intelligence to launch sophisticated schemes.

The research, which examined 1,100 government organizations, underscores a significant uptick in fraudulent activities targeting government programs by malicious actors to create convincing fake documents and identities using generative AI.

“With fraudsters increasingly turning to advanced technologies, government agencies are recognizing the need to fight fire with fire—by adopting AI-powered tools to stay ahead,” study researchers stated.

The study found that 85% percent of government decision-makers ranked fraud prevention among their top five strategic priorities. But despite recognizing the potential of AI to help combat fraud, the study showed many state and local government entities face challenges in effectively deploying such technologies.

The study notes that 60% of respondents believe generative AI will drive innovation, but only 44% have implemented generative AI, trailing behind other sectors.

Those who responded to the survey reported being overwhelmed by their volume of work, with nearly half citing insufficient staffing and resources to effectively combat fraud. The report says adopting AI is not enough and that government agencies must also establish clear processes, training and governance to ensure effective utilization.

The House oversight committee last September held a hearing on fraud prevention strategies in which it urged government agencies to adopt “data-led prevention practices” to stay one step ahead of cybercriminals.

“Fraud prevention requires technology and tools,” Linda Miller, co-founder and chair of the nonprofit Program Integrity Alliance, said in her testimony.

The SAS study similarly encourages government agencies to prioritize adoption of generative AI and machine learning software to enhance fraud detection capabilities, arguing that implementing robust training programs and governance structures is “essential to maximize the benefits of AI technologies.”

According to the study, 97% of respondents said they expect to use generative AI tools in the next two years to help detect, prevent or investigate fraud.

“Fraud is no longer just a financial risk—it’s a trust issue. Agencies must modernize their fraud strategies, and most now see generative AI as a critical piece of that puzzle,” the report reads.

The SAS report concludes that while the integration of AI into state governments presents challenges, it also offers a critical opportunity for them to strengthen their defenses.

“Generative AI is not just a tech upgrade—it’s fast becoming a frontline defense in the fight against government fraud,” the study reads.