Lesson 84 - Advanced Accounting Course

Lesson 84: AI-Based Fraud Detection Techniques

🔍 What is AI-Based Fraud Detection?

AI-Based Fraud Detection means using Artificial Intelligence (AI) and Machine Learning (ML) to automatically detect unusual, suspicious, or illegal financial activity.

🧠 AI systems learn from large sets of data and can spot patterns or behaviors that human auditors might miss — faster and more accurately.

⚠️ Why Traditional Methods Aren’t Enough

🧠 How AI Detects Fraud

AI looks for anomalies — things that don’t fit the normal pattern.

🧰 Examples of AI Detection Techniques:

🏦 Where AI is Used in Fraud Detection 

📊 AI Fraud Detection Techniques – Comparison Table

✅ Benefits of AI in Fraud Detection

🚨 Real-World Example

A multinational bank uses AI to analyze all card transactions in real time.
A sudden $10,000 charge from another country is flagged in 0.5 seconds.
The card is instantly frozen, and the customer is alerted. ✅
➡️ Fraud prevented in real time.

🚧 Risks & Limitations

🧩 Bonus: Human + AI = Strongest Defense 🛡️

AI doesn’t replace human judgment. Instead:

• AI flags potential frauds
  
  

• Humans review and confirm them
  
  

This combination leads to faster, smarter, and more reliable fraud detection!

📘 Summary

• AI uses data, algorithms, and pattern detection to catch fraud before it spreads
  
  

• It’s faster and more accurate than traditional auditing
  
  

• Anomaly detection, predictive modeling, and NLP are key tools
  
  

• Used across banking, insurance, payroll, procurement, and accounting
  
  

• It’s powerful, but needs human oversight and quality data