AI in fraud, audit and compliance: 9 real deployments

HHS uses ChatGPT and other language models to scan at least five years of Single Audit Act compliance records across all 50 states.

HHS announced it will deploy ChatGPT and other AI tools to analyze state audit reports across all 50 states on an ongoing basis to detect healthcare fraud, with letters dispatched to governors and state treasurers.

Traditional Medicare is running WISeR, a six-state AI prior-authorization pilot using algorithmic denials, which congressional Democrats are moving to overturn via the Congressional Review Act.

The CFTC is deploying machine-learning algorithms that flag unusual betting patterns on Polymarket before major news breaks, the first publicly confirmed use of AI for enforcement in crypto prediction markets by a senior US regulator.

HMRC confirmed it uses AI to monitor suspected tax evaders' social media posts, cross-referencing declared income against visible spending on luxury holidays and high-end purchases, restricted to criminal investigations.

DOGE used ChatGPT to classify National Endowment for the Humanities grants with yes/no 'DEI-related' judgments to terminate roughly $100M in funding; a federal judge ruled the practice unconstitutional and blocked the cuts.

Reported: 143-page ruling found unconstitutional viewpoint discrimination; the model had labeled a Holocaust literature anthology as DEI-related

The IRS is expanding AI and advanced analytics to identify tax non-compliance and fraud after mass layoffs of experienced enforcement staff, with the IRS CEO saying AI spots return anomalies faster than legacy statistical models.

Text watermarking deployed on AI model outputs for EU AI Act compliance

The US Army allegedly used AI tools to evaluate bids for a $450 million White Sands Missile Range support contract.

Reported: A bid protest alleges the tools hallucinated a weakness in Trax International's proposal; the competing bids differed by $29.4 million.