You possibly couldn’t – and that’s exactly the point. Systems which can reproduce near perfect counterfeits of legitimate financial documents are increasingly prevalent and sophisticated.
Last week, OpenAI released an improved image generation model which can create images with photorealistic outputs including text.
Why should we care?
Fraud involving fake financial documents is a massive global issue. The international Association of Certified Fraud Examiners estimate organisations lose approximately 5% of revenue to fraud each year.
In its 2024 report, the association documents losses exceeding US$3.1 billion across 1,921 cases. Billing and expense fraud constitute 35% of asset misappropriation cases, with firms reporting median losses of US$150,000 per incident.
Most concerning, fraudsters primarily conceal these crimes by creating fake documents or altering files, exactly what AI now simplifies.
Fake documents enable fraud in various ways. An employee might create a fictitious receipt for a business lunch that never happened, or a contractor might fabricate receipts for expenses never incurred. In each case, the fraudster uses counterfeit documentation to extract money they’re not entitled to.
This problem is likely more widespread than recognised. A 2024 survey revealed 24% of employees admitted to expense fraud, with another 15% considering it.
Even more concerning, 42% of UK public sector decision makers confessed to submitting fraudulent claims.
AI removes barriers to deception
Understanding how AI technology may lead to a surge in potential fraud requires examining the classic “fraud triangle”. This explains that fraud requires three elements: incentives, rationalisation and opportunity.
Historically, technical barriers limited the ability to create fake documentation even when motivation existed.
AI eliminates these barriers by making fake documentation easy to create. Research confirms when opportunity expands, fraud increases.
When fake claims become everyone’s problem
When fake receipts support tax deductions, we all pay.
Consider a marketing consultant earning $120,000, who uses an AI image generator to create several convincing receipts for non-existent expenses totalling $4,000. At their marginal tax rate of 30%, this fraud saves them about $1,200 in taxes – if they are not caught.
The Australian Taxation Office estimates a $2.7 billion annual annual gap from incorrectly over-claimed deductions by small businesses. With digital forgery becoming more accessible, this gap could widen significantly.
