Balancing fraud analytics with legal requirements: Governance practices and trade-offs in public administrations

Abstract

Fraud analytics refers to the use of advanced analytics (data mining, big data analysis, or artificial intelligence) to detect fraud. While fraud analytics offers the promise of more efficiency in fighting fraud, it also raises legal challenges related to data protection and administrative law. These legal requirements are well documented but the concrete way in which public administrations have integrated them remains unexplored. Due to the complexity of the techniques applied, it is crucial to understand the current state of practice and the accompanying challenges to develop appropriate governance mechanisms. The use of advanced analytics in organizations without appropriate organizational change can lead to ethical challenges and privacy issues. The goal of this article is to examine how these legal requirements are addressed in public administrations and to identify the challenges that emerge in doing so. For this, we examined two case studies related to fraud analytics from the Belgian Federal administration: the detection of tax frauds and social security infringements. This article details 15 governance practices that have been used in administrations. Furthermore, it highlights the complexity of integrating legal requirements with advanced analytics by identifying six key trade-offs between fraud analytics opportunities and legal requirements.

Keywords

• artificial intelligence
• big data
• fraud analytics
• governance
• public administration