The Public Sector Fraud Authority (PSFA) is to will work with Quantexa using Artificial Intelligence to prevent crime aimed at the public sector.

Quantexa’s technology can process large amounts of data at speed to identify suspicious activity.

A government statement said the £4m contract is part of a wider investment across government “to take the fight to those committing fraud against the taxpayer – rooting out fraud and using modern tools and techniques to stop it before it happens”.

Cabinet Office Minister Baroness Neville-Rolfe said: “Fraud against the public purse is unacceptable and we’re stepping up the fight against those who wish to profit off the backs of taxpayers.

“Through the use of cutting edge technology, the Public Sector Fraud Authority will use data and AI to help us in the fight against fraudsters.”

The Cabinet Office previously worked with Quantexa to reveal instances of potential fraud within the government’s Bounce Back Loan Scheme.

This involved analysing an initial set of 250 networks of people, organisations, and places during which more than 100 million data items were processed.

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PSFA CEO Mark Cheeseman said: “We know that fraudsters are a capable and committed adversary and the way they commit fraud is diverse and evolving.

“As criminals develop more sophisticated tools, we too must innovate and modernise our approach to prevent fraud.

“By bringing together expertise and tools from the public sector and private sector we will raise our ambition and challenge ourselves to increase our impact on this often unseen and underestimated crime.”

The PSFA was backed by £25 million of funding. It will be the centre of the government’s Counter Fraud Function and It has been tasked with modernising the government’s counter fraud response, working with departments and public bodies to improve their fraud defences and using leading practice and modern techniques to protect taxpayer money.

It has set a first-year target of £180 million of recognised fraud benefits, which it is on course to hit.

The Government Counter Fraud Function brings together the c.13,000 people who work in departments and public bodies to fight fraud.

This includes those working to understand and mitigate fraud risk within their organisations and those who work in the public sector to fight economic crime.