Artificial Intelligence Is Fueling a New Generation of Financial Fraud

Artificial Intelligence (“AI”) is rapidly changing the way businesses operate—but it is also providing fraudsters with powerful new tools to commit increasingly sophisticated financial crimes. Today’s scams are more convincing, more targeted, and more difficult to detect than ever before.

Historically, accounts payable, accounts receivable, payroll, and expense reimbursement functions have been common targets for fraud. With the widespread availability of generative AI, criminals can now create realistic emails, invoices, receipts, websites, voice recordings, and even video impersonations that can deceive employees into authorizing fraudulent payments.

Businesses of all sizes should review their internal controls and educate employees about these emerging threats.

How AI Is Changing the Fraud Landscape

AI has significantly lowered the technical barriers for fraud. Criminals no longer require advanced graphic design or programming skills to create convincing fraudulent documents or communications.

Examples include:

• Executive impersonation using AI-generated emails
• Fake vendor invoices and payment requests
• Fabricated W-9 forms and corporate documents
• Artificially generated websites for fictitious vendors
• Altered expense receipts
• Deepfake voice and video messages requesting wire transfers
• Synthetic identities used to establish fraudulent vendor accounts

Because AI can quickly analyze publicly available information, these scams frequently include accurate names, titles, company information, and transaction details, making them appear legitimate.

Increased Risk of Internal Fraud

AI is also making internal fraud easier to commit.

Employees can now use readily available AI tools to:

• Create or modify expense receipts
• Alter supporting documentation
• Generate fictitious vendor records
• Produce convincing invoices
• Fabricate business correspondence

These tools require little technical expertise and can produce documents that appear authentic.

Recommended Actions for Businesses

To reduce exposure to AI-enabled fraud, businesses should consider strengthening both their internal controls and employee awareness.

1. Strengthen Vendor Verification

• Review vendor master files regularly.
• Remove inactive or duplicate vendors.
• Independently verify all new vendors before setup.
• Confirm taxpayer identification numbers, banking information, addresses, and business registrations.

2. Reinforce Payment Controls

Implement appropriate segregation of duties by requiring:

• Dual approval for wire transfers and ACH payments.
• Independent verification of changes to vendor banking instructions.
• Confirmation of unusual payment requests through an alternate communication method (such as a known telephone number).

No payment should be processed solely based on an email request.

3. Review Expense Reimbursement Procedures

Consider requiring:

• Original receipts whenever possible.
• Random audits of employee expense reports.
• Additional review of unusually high or repetitive expenses.
• Verification of supporting documentation for significant reimbursements.

4. Train Employees

Regular employee education remains one of the most effective fraud prevention tools.

Training should include:

• Recognizing phishing emails.
• Identifying deepfake voice and video communications.
• Verifying payment requests through independent channels.
• Understanding the capabilities and limitations of AI-generated content.

Employees should be encouraged to question unusual requests, even when they appear to originate from senior management.

5. Evaluate Technology Controls

Businesses should consider implementing or enhancing:

• Positive Pay services.
• ACH filters and blocks.
• Dual authorization for electronic payments.
• Multi-factor authentication.
• AI-assisted fraud detection tools.
• Continuous monitoring of payment activity.