US Treasury Recovered $4B in Fraudulent Payments in FY2024

AI and Screening Drive Recovery Surge

Machine-learning AI flagged roughly $1 billion in suspect payments during the fiscal year. Prioritizing high-risk transactions before they cleared added another $2.5 billion to the total. Risk-based screening expansions contributed $500 million, while processing efficiency improvements recovered $180 million more.

The Do Not Pay Business Center, which cross-references payment recipients against databases of deceased individuals, debarred vendors, and other ineligible parties, helped identify and avert $11 billion in fraud. That's a separate measure tracking fraud prevented across multiple fiscal years and databases.

Shift to Electronic Payments

Executive Order 14247 mandates that the federal government stop issuing paper checks by September 30, 2025. All federal disbursements would shift to electronic funds transfers under the directive. The move aims to reduce fraud vectors inherent in paper-based payment systems and accelerate Treasury's ability to screen transactions in real time.

Statutory Expansion Ahead

Statutory changes being considered would formally expand Treasury's pre-payment verification authority and make fraud screening a legal requirement. The Treasury has signaled interest in codifying the screening practices that drove the FY2024 gains, ensuring continuity regardless of administration changes.

Interestingly, proposals to create a federal regulatory framework for dollar-pegged stablecoins would, in theory, bring those instruments under compliance and verification requirements similar to those Treasury is building into traditional payment flows. The parallel suggests policymakers see payment verification as a foundational principle across both legacy and digital payment systems.