Brazilian Tax Authority has developed an AI-powered tool to detect illicit crypto transactions, enhancing tax data analysis.
Brazil’s Tax Watchdog Employs Artificial Intelligence to Identify Cryptocurrency Crimes
Government agencies are progressively integrating artificial intelligence (AI)-based tools to simplify their operations. The Brazilian tax watchdog, the Federal Revenue Service, has recently reported on the implementation of an instrument that is specifically designed to identify illicit cryptocurrency transactions.
The institution reported in a note released last week that the tool had been developed in-house and included artificial intelligence algorithms and complex network analysis to simplify the process of analyzing tax data. This enabled the identification of illicit transactions and enhanced the efficiency of investigating activities.
The note illustrates two instances in which this instrument assisted in the identification of the illegal use of cryptocurrency in transactions totaling more than $180 million.
Authorities were able to identify a potential conspiracy involving the movement of over $125 million by shell companies to purchase cryptocurrencies in the initial case described by the tools. The tool established a connection between tax irregularities and potentially other criminal activities and dubious import and remittance operations.
The organization describes how the tool assisted in the detection of a money laundering case involving narcotics and arms, as well as tax evasion with cryptocurrency, in the second case.
This instrument has also assisted authorities in identifying companies that were established primarily for the purpose of tax evasion and the beneficiaries of these operations by analyzing the flow of various cryptocurrencies.
The Federal Revenue Service is not the sole state institution that is investigating the potential of AI to improve productivity.
The Central Bank of Brazil is also investigating the integration of AI components into its CBDC pilot, as President Roberto Campos Neto recently stated in a presentation. The bank established an AI division, the Center of Excellence for Data Science and Artificial Intelligence (Cde IA), to address this issue.
