Generative AI in Fraud Prevention

Abstract

This chapter explores the transformative potential of generative artificial intelligence (AI) in combating financial fraud, redefining traditional detection systems. It examines generative AI's capabilities in anomaly detection, behavioral modeling, and predictive analytics, addressing fraud complexities from technologies like cryptocurrencies, decentralized finance (DeFi), and AI-driven scams. The integration of generative AI with blockchain enhances transparency, scalability, and proactive prevention. Real-world case studies highlight its effectiveness against credit card fraud, deepfake impersonations, and synthetic identity fraud. Ethical and operational concerns, including AI bias, privacy, and security, are discussed alongside strategies for ethical governance and collaboration. Generative AI is positioned as a key tool for building resilient and trustworthy financial ecosystems to counter current and emerging fraud threats.