The Federal Revenue Service, the Brazilian tax watchdog, recently revealed that it has been using an in-house tool that leverages AI to detect money laundering and tax evasion transactions involving crypto. The tool has already been proven useful in identifying over $180 million in funds involved in the illicit usage of cryptocurrency.
Brazilian Tax Watchdog Leverages AI to Detect Crypto Crimes
Government agencies are increasingly incorporating tools that implement artificial intelligence (AI) to ease their tasks. The Federal Revenue Service, which is the Brazilian tax watchdog, has recently reported about the implementation of one of such tools focused on detecting illicit transactions involving crypto.
In a note released last week, the institution reported that the tool had been created in-house and included artificial intelligence algorithms and complex network analysis to facilitate the task of analyzing tax data. This allowed for the detection of illicit transactions and improved the productivity of probing activities.
The note presents two instances in which this tool helped detect the illegal use of cryptocurrency in transactions for over $180 million.
In the first case described, the tools helped authorities pinpoint a potential scheme involving over $125 million moved by shell companies to purchase cryptocurrencies. The tool linked suspicious import and remittance operations with tax irregularities and possibly other crimes.
In the second case, the organization describes how the tool helped detect a money laundering case involving drugs and arms and tax evasion with cryptocurrency.
This tool has also helped authorities identify companies created mainly for tax evasion purposes and the beneficiaries of these operations by analyzing the flow of different cryptocurrencies.
The Federal Revenue Service is not the only state institution researching the use of AI to enhance productivity. As President Roberto Campos Neto explained in a recent presentation, the Central Bank of Brazil is also studying including AI elements in its CBDC pilot. For this, the bank created an AI division, the Center of Excellence for Data Science and Artificial Intelligence (Cde IA).
