Emerging Threats for Law Enforcement and Government Agencies

You may always hear that fraud is not a victimless crime, and that is true even within government and law enforcement agencies and the rest of the public sector. When fraud impacts these agencies, its effects can eventually trickle down to communities, hurting agency budgets, community programs and more. 

Some of the anti-fraud professionals on the front lines of this fight came together during “Fraud Risks on the Rise: Emerging Threats in Law Enforcement and the Public Sector,” a panel discussion at the 37th Annual ACFE Global Fraud Conference in Boston that was moderated by Kimberly Benoit, CFE, CPA, inspector general at the Library of Congress. They opened up about emerging threats to the public sector and more, showing how agencies are working together to detect fraud earlier and respond effectively. 

Globalization 

Globalization is becoming more common in fraud cases investigated by law enforcement and government officials. The panelists spoke on how things have changed and what they expect in the future. 

Chris Schrank, acting inspector general at the Federal Housing Finance Agency, said defendants in fraud cases are coming from all around the world, and that has turned previously local crimes to regional, national and international. 

So, what is helping fight this threat? Schrank said his organization took a page from the financial services industry by implementing Know Your Customer (KYC) practices. 

“I think it's something that we can all do a better job in the government sector when we're providing benefits to individuals to make sure we know who's receiving those funds,” said Schrank. 

Collaboration doesn’t hurt either. All panelists pointed out how helpful it is for the fraud fight when agencies work together to solve cases. 

Emerging Technologies 

Jarod Koopman with the IRS Criminal Investigation said artificial intelligence (AI) is helping both fraud fighters and fraudsters by making their jobs easier and doing things more at scale. Koopman said, unfortunately, frauds are now being scaled to millions of potential victims, but he spoke positively about how fraud fighters can use AI and other technologies to their advantage. 

“Start diving into where generative or authentic AI [can] come into play with the workflow,” said Koopman. “How can we get faster in identification? How can we get faster in bringing those leads? Then it's up to us to get faster and be able to charge [fraudsters] [and] elevate the largest schemes, the most impactful, and be able to work more on those at scale.” 

Koopman also sees cryptocurrency as an emerging threat, especially since mobile payment apps are incorporating crypto with financial institution integration. 

“It's opening everything up,” said Koopman. “You can go anywhere you want globally within minutes with almost like an anonymity that is tough to trace.” 

Brian Lamkin, CFE, CIG, inspector general of the State of South Carolina, talked about the velocity of fraud. 

“We're still dealing with the same schemes [and] different players, but they're integrating the technology to their advantage,” said Lamkin. “You have to understand where the technology is today.” 

The Future of Fraud Threats 

The panelists were asked which fraud schemes they were most concerned about as organizations look to the future. Schrank said voice recognition with spoofed phone numbers and AI-generated images. Koopman said deepfakes and voice modification. 

So, what tools do they think are needed to face this future? Lamkin said access to documents and testimonial subpoenas. 

“I think that the next biggest tool that we have, and I can't emphasize this enough, is investment in people,” said Lamkin. “[And] I think it's extremely important that [staff] stay current on what is going on from the most relevant topics and techniques.” 

“The agent of the future, to me, is going to be somebody who is adaptable to technology, has an interest in learning it, being proficient in it, but most importantly, being able to communicate,” said Schrank. “You need to be versed in technology, you have to be open to learning new technology and you have to be adaptable to what's going to come down the road.” 

Schrank said events like the ACFE Global Fraud Conference are instrumental in keeping fraud fighters on the right track for the future.  

“When you see everybody coming together and look at this room right here of fraud examiners, fraud specialists, people who have dedicated their career to doing this, look at the impacts we can have,” said Schrank. “We can continue to do more, but we have to do more on the prevention side and on the education side and I think that's where we really show the true value of this community: how we come together to stop [fraud].”