One way of doing this is to examine the relationship between people and computers to understand how machines can boost the effectiveness of tax professionals, resulting in a collective intelligence. To that end, high-performing revenue agencies should seek a solution that will develop a governance model of AI systems for tax purposes, and help governments better understand the externalities of tax policy with AI systems.
2. Preventing financial crime and predicting corruption
Financial crime continues to plague governments and the financial services sector. According to UN estimates, money laundering and related crimes alone cost between US$1.4 trillion and US$3.5 trillion globally a year
Regulators are encouraging government agencies and financial institutions to use AI technologies to detect money laundering. In doing so, they will help to cut funding for human trafficking, narcotics, arms sales, and terrorism.
Governments can also use AI to predict corruption and spot fraud. Researchers at the University of Valladolid in Spain have created a computer model that calculates the probability of corruption taking place in Spanish provinces. The model, which is based on neural networks, also identifies the conditions that encourage corruption.
Meanwhile, AI is also being used to predict and prevent fraudulent health insurance claims. By analyzing the massive amount of data created in the healthcare system, the technology can flag likely fraud before it starts and can create an evidence-base for fraud examiners and law enforcement to prosecute cases.
Governments elsewhere are using AI for disbursement as well as to control leakages in subsidies and welfare payments. Denmark is using AI and blockchain for faster and more effective processing of welfare payments to beneficiaries. And the UK’s Department for Work and Pensions has rolled out and tested AI algorithms to track down large-scale corruption of its benefits and welfare programs.
3. Transforming procurement to deliver better value for money
For years, technology has been taking some of the load in this labor-intensive area. But it’s only been able to do this partially.
AI has the potential to not only streamline procurement processes, but to transform them – saving time and money. It can do this by:
- Making procurement processes smarter – for example, alerting government and suppliers to supply chain disruption, recognizing and flagging supplier compliance issues and identifying fraud
- Automating menial procurement tasks, particularly in invoice processing and approving proposed purchases
- Identifying opportunities to reduce government spending
Technologies under the AI umbrella can also improve the procurement process for government entities, as well as for suppliers bidding for the government work. For example, the US Air Force recently announced plans to use AI to make sense of complex acquisition regulations and speed up the buying process for goods and services.