Brazil tax authority uses AI to uncover $180 million in crypto fraud

The Brazilian Federal Revenue Service has announced that it is employing a new artificial intelligence (AI) tool to detect money laundering and tax evasion involving cryptocurrencies.

This innovative tool has already proven effective, identifying more than $180 million linked to illegal crypto transactions.

Developed internally by the Federal Revenue Service, the AI tool leverages machine learning algorithms and network analysis to scrutinise tax-related data with greater accuracy.

By analysing complex data patterns, the agency has been able to pinpoint suspicious transactions more effectively, significantly enhancing the efficiency of its investigative processes.

One major case uncovered by the AI involved more than $125 million being routed through shell companies to Buy cryptocurrencies.

The tool flagged irregularities in import and remittance operations, which were linked to potential tax fraud and other crimes.

In a separate case, the AI system identified a money laundering network connected to drug and arms trafficking, along with associated tax evasion through digital currencies.

Beyond these cases, the AI tool has played a crucial role in identifying businesses that were created primarily to evade taxes.

By analysing the flow of various cryptocurrencies, it has helped authorities trace the individuals or entities benefiting from these schemes.

The use of AI by the Federal Revenue Service reflects a broader trend among government agencies to adopt technology for more effective oversight.

The Central Bank of Brazil is similarly looking into AI applications, including its pilot program for a Central Bank Digital Currency (CBDC).

To drive these initiatives, the bank has set up a specialised research unit, the Center of Excellence for Data Science and Artificial Intelligence (Cde IA).