Technological advances can as easily open the door to fraud as shut it. Case in point: Although significant improvements have been made to generative artificial intelligence's (GenAI's) document generation capabilities, such upgrades have generally made fraud easier to perpetrate. Here's how your business can prevent and detect GenAI document fraud attempts by rogue employees.
Perennial Problems
Expense reimbursement fraud is a perennial problem for most organizations. With GenAI technologies, dishonest workers can create flawless documentation to request reimbursement of expenses they never incurred or that didn't include business activity.
Similarly, "ghost" employee schemers can use GenAI to create resumés and application data that appear legitimate for "employees" who don't actually exist. This may enable them to perpetrate payroll fraud. In fact, any process that relies on documentation may be susceptible to GenAI document forgeries.
Spotting a Fake
To find ersatz documents that may be circulating in your organization, deploy a multi-layered approach. Managers should review documents with a degree of professional skepticism and ask to see original receipts and other documentation when they feel it's warranted. This process can be as simple as eyeballing a document. Look for suspiciously perfect presentation or, alternately, typos and inconsistent fonts, spacing and alignment.
They should also examine file metadata — for example, the document's author and its date of creation or modification. Checking when a file was generated could reveal that it was created long before an employee supposedly incurred travel expenses.
Test and Train
To prevent such schemes, examine your business's processes and the types of documentation they rely on. You might test GenAI's ability to create fake documents associated with each process. For example, use the software to create restaurant receipts, hotel invoices and car rental receipts. And conduct online research on the types of false documents others have successfully used to commit fraud. With this information, you'll know which of your business processes may be the most susceptible.
You also need to provide thorough training to those tasked with reviewing documents for authenticity. Generate documents using GenAI and test their ability to identify them. Also, educate all workers about the potential consequences of using GenAI improperly and offer a fraud hotline that enables them to anonymously report rulebreakers.
If you or a manager are unsure about the authenticity of employee-furnished documents, meet with workers face-to-face to review the documents together and gauge their response. If you strongly suspect fraud, be sure to involve legal counsel and a forensic accountant. You may want to leave any employee interviews to these professionals.
Keep On Top of It
As AI continues to evolve, fraud perpetrators are likely to invent increasingly sophisticated schemes. So your business needs to supercharge its detection and prevention capabilities and upgrade them when necessary. Contact us for more tips on avoiding fraud.
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