Key insights:

• • • AI can improve officer safetyĚý— By helping them prepare for high-risk situations and make better decisions under pressure, advanced technology can enhance officer safety.

    • AI can increase operational efficiencyĚý— AI can reduce administrative burdens and improve efficiency overall, allowing officers to spend more time on police work.

    • Responsible implementation is essentialĚý— To ensure AI strengthens public trust while protecting civil liberties, proper guardrails and oversight need to be enacted.

Each year, during , we pause to honor the brave men and women in law enforcement who have made the ultimate sacrifice in service to their communities. As we pay tribute to those we have lost, we are reminded of the inherent dangers officers face every day.

In recognition of the importance of reflection and advancement, it is imperative that we examine the responsible application of emerging technologies, especially AI, to enhance officer safety, support their objectives, and reinforce overall public safety.

AI is already being integrated into public safety systems in meaningful, measurable ways. When guided by strong ethical principles, transparency, and commitment to community trust, AI can serve as a force multiplier and a protective partner for members of law enforcement. The goal is not to replace officers, of course, but to equip them with better tools, that allow them to reduce risk and return home safely after every shift.

Improving situational awareness and operational readiness

One of the most immediate benefits of AI in law enforcement is its ability to enhance situational awareness. When officers respond to a call, the first minutes on scene are often the most critical — and the most dangerous. AI can help reduce uncertainty by providing rapid access to relevant information.

For example, AI-powered systems can analyze incident data, criminal records, and community reports to give officers a clearer picture of what to expect when they arrive on scene. This includes identifying patterns of violence, recognizing repeat offenders, or flagging locations that may have a history of high-risk activity. Such insights allow for better preparation, smarter deployment, and more informed decision-making under pressure.

Additionally, AI can assist in public records and open-source searches, pulling critical data from comprehensive databases, the internet, and connected devices in seconds rather than hours. This immediate access to information enables faster, more effective responses. In short, AI can save valuable time when seconds count.

Streamlining administrative work to focus on the mission

Law enforcement officers spend a significant portion of their time on administrative duties, such as writing incident reports and managing court schedules and citations. These tasks, while necessary, take officers away from community engagement and proactive policing.

AI can help reduce this administrative burden by automating routine documentation. Natural language processing tools can draft reports based on officer input, ensuring consistency and freeing up time for frontline duties. Similarly, AI-driven scheduling systems can optimize shift assignments, account for court appearances, and manage on-call rotations. This AI-enabled administrative assistance goes a long way in ensuring that staffing levels are appropriate and that officers are not overburdened.

When guided by strong ethical principles, transparency, and commitment to community trust, AI can serve as a force multiplier and a protective partner for members of law enforcement.

By reducing the administrative load, AI allows officers to focus on what they do best — serving and protecting their communities. This not only improves job satisfaction among officers themselves but also increases operational efficiency and public safety outcomes.

Building guardrails for responsible AI use

As with any powerful advanced technology, the integration of AI into law enforcement must be guided by clear policies, oversight, and accountability. The goal is not to deploy AI indiscriminately, but rather to ensure its use enhances safety without compromising civil liberties or public trust.

This requires proactive collaboration between technologists, law enforcement agencies, policymakers, and the communities they serve. Standards must be developed for data privacy, algorithmic transparency, and bias mitigation. AI-enabled systems should undergo rigorous testing and independent review before deployment. Further, officers must be trained not only on how to use these tools, but also on the limitations and ethical implications of using these tools as well.

Finally, public trust is essential. Members of the community need to know that AI is being used to protect their safety and that of law enforcement — it is not a tool to surveil them without cause. Communicating transparently how the AI systems are designed, what data they use, and how decisions are made will be key to maintaining legitimacy and trust with the public.

A future of safer streets and stronger trust

The integration of AI into law enforcement is not about replacing human judgment — rather, it’s about augmenting officers’ judgment. When used responsibly, AI can reduce risk, improve preparedness, and support officers in carrying out their duties more safely and effectively.

In the years ahead, we can expect to see broader adoption of drone first responders, real-time language translation tools, and predictive systems that further help enhance officer and community safety measures. However, technology alone is not the answer. Success will depend on how thoughtfully these tools are implemented, how well citizens’ rights are safeguarded, and how deeply communities are involved in the process.

This week, as we honor those officers who have fallen in the line of duty, let us also commit to doing everything we can to protect those who serve today. AI, when applied with care, can be a powerful ally in their mission, keeping officers safe, allowing them to make better decisions, and together, building stronger, safer communities for all.

The data provided to you may not be used as a factor in establishing a consumer’s eligibility for credit, insurance, employment, or for any other purpose authorized under the Fair Credit Reporting Act.

You can find more on the challenges facing law enforcement here

Key takeaways:

• • • The FIFA World Cup is a catalyst, not the root cause — Mexico City’s housing affordability crisis predates the coming tournament. Rental prices have been rising uncontrollably for years, displacing thousands of families annually. The World Cup will accelerate and amplify an already existing problem.

    • The 2024 rental reform is a step in the right direction, but it has significant limitations — Capping rent increases at the annual inflation rate was a necessary measure, but its impact has been limited by grey areas in the law.

    • The real battle is formalization — No housing regulation can be fully effective if a large portion of the market operates outside of it. Until authorities find ways to make formal rental agreements genuinely attractive and accessible for both landlords and tenants.

On the eve of the 23^rd playing of the FIFA World Cup, Mexico stands as one of three host countries for one of the most significant sporting events in the world. It will feature matches in Mexico City, Guadalajara, and Monterrey, and it will be co-hosted alongside the United States and Canada.

Organizing such an event carries notable financial benefits, including a surge in tourism, job creation, and substantial foreign investment — all of which generate a local economic spillover that strengthens the national marketplace. At the same time, Mexico’s major capitals— especially its World Cup host cities — have been undergoing a level of urban transformation that has significantly altered the daily lives of its residents. Chief among these changes is the sharp rise in rental costs, which has been pushing residents toward the cities’ outskirts. According to government figures, are displaced each year due to the uncontrolled increase in housing prices in Mexico City alone.

Mexican authorities had to get to work

Legal changes to real estate regulation in Mexico City are not isolated, and what is implemented in the capital often sets a precedent for the rest of the country. Time and again, Mexico City has served as a laboratory for new policies, and when these are proven effective, they become models for nationwide reform.

According to government figures, more than 20,000 households are displaced each year due to the uncontrolled increase in housing prices in Mexico City alone.

That said, in August 2024 — after the city’s head of government noted that rentals costs in none of the boroughs of Mexico City fall below the city’s minimum wage, and that 9 out of 13 boroughs average rents that exceeded twice the minimum wage — the Official Gazette of Mexico City published a decree amending Articles 2448-D and 2448-F of the Civil Code for the Federal District, imposing limits on rent increases for residential properties. Previously, the monthly rent increase could not exceed 10% of the agreed-upon rent. That paragraph was amended to establish that rent increases shall never exceed the inflation rate reported by the Bank of Mexico for the previous year.

It is worth noting that the prior 10% cap was nearly three times the general annual inflation rate calculated by the Bank of Mexico in 2025, which stood at 3.69%.

More than a year after these reforms took effect, however, 2025 closed with an average increase in rental prices of . With the FIFA World Cup approaching, prices are expected to continue rising uncontrollably due to the influx of tourists drawn by the event. This concern is well-founded: Ahead of the 2022 World Cup in Qatar, empowered landlords to raise rents by more than 40%.

Mexico City’s rental reform also introduced additional measures. For example, a digital registry for lease agreements was established, to be immediately authorized and managed by the Government of Mexico City. Landlords now are required to register lease agreements within 30 days of their execution. Furthermore, landlords are prohibited from refusing to rent to tenants on the grounds that they have children or pets.

The registration requirement carries real consequences: Should a landlord fail to register a contract within the stipulated period, their ability to invoke legal protection mechanisms in the event of a dispute with a tenant becomes significantly more complicated.

Regardless of the efforts, it’s not all smooth sailing

That said, the reform contains certain grey areas that limit its scope. For instance, it only applies under specific conditions — most notably when a lease has been in place for three years or more. A landlord can effectively circumvent the cap by choosing not to renew an existing contract and instead requiring the tenant to sign a new one at a higher price.

A separate but equally significant obstacle to the reform’s effectiveness is the rapid growth of short-term rental platforms. In recent years, the proliferation of temporary accommodation services has steadily reduced the supply of traditional long-term rentals, as more properties are listed on platforms such as Airbnb, Vrbo, or others. Indeed, every 48 hours, three housing units in Mexico City are . And from a national perspective, the Tourism Gross Product reached approximately US $151.5 billion, equivalent to 8.7% of Mexico’s GDP.

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Every 48 hours, three housing units in Mexico City are converted into Airbnb listings.

This problem is further compounded by the scale of informal rental arrangements. According to the National Housing Survey conducted by Mexico’s National Institute of Statistics and Geography (INEGI), there are more than 200,000 informal rental agreements in Mexico City — none of which involve formal contracts.

Forcing the real estate market into formalization

This brings us to the central challenge facing city authorities with regard to housing: The need to incentivize the formalization of the real estate market. This is already complicated by the country’s low tax culture and the requirement for landlords to enter a specific tax regime that raises their tax burden. Additionally, rental contracts are not only essential for protecting tenants’ rights, but they also are equally important for landlords — because without a legally binding agreement, there is no guarantee that the terms of any arrangement will be honored.

Paradoxically, the recent reform may actually push the informal market further underground. By requiring landlords to formally declare their rental income, the regulation inevitably creates a sense of heightened oversight — one that informal landlords may seek to evade rather than comply with.

To the authorities of Mexico City, the message is clear — punitive measures alone will not bring the informal market into the fold. Tax benefits for landlords who register their contracts, streamlined and accessible digital registration processes, and legal protections that make formal agreements genuinely advantageous for both parties could go a long way toward building trust in the system.

The 2026 FIFA World Cup will come and go, of course, but the people of Mexico City will remain. They deserve a housing market that works for them — not one that treats their homes as a commodity to be priced beyond their reach every time the world turns its attention to their city.

You can find out more about the

Key insights:

• • • Non-compliance is significantly more expensive than compliance — Data consistently shows the cost of non-compliance can be greater than proactive compliance investments.

    • Reputational damage and hidden costs often outweigh direct fines — Beyond financial penalties, the damage from legal fees, loss of customer trust, and operational disruptions from non-compliance can inflict long-term harm.

    • Strategic investment in compliance yields a competitive advantage — A robust compliance program builds trust, attracts investors, and demonstrates greater operational resilience in a complex regulatory landscape.

There’s a persistent myth in the business world that compliance programs are a necessary burden, a line item to be minimized and managed rather than invested in strategically. The data tells a very different story, however, and it has for quite some time. For organizations still treating compliance as an overhead expense, it’s time to reconsider the math and view the broader strategic picture.

The numbers don’t lie: Non-compliance costs more

Non-compliance costs are 2.65-times the cost of compliance itself, a finding that dates back to the of multinational organizations. While the average cost of compliance for the organizations in that study was $3.5 million, the cost of non-compliance was much greater. That means simply by investing in compliance activities, organizations can help avoid problems such as business disruption, reduced productivity, fees, penalties, and other legal and non-legal settlement costs.

According to a later report from from 2017 (the most recent set of analytical data on the subject), the numbers have only grown more striking. The study showed that average cost of compliance increased 43% from 2011 to 2017, totaling $5.47 million annually. However, the average cost of non-compliance increased 45% during the same time frame, adding up to $14.82 million annually. The costs associated with business disruption, productivity losses, lost revenue, fines, penalties, and settlement costs add up to 2.71-times the cost of compliance.

And these non-compliance costs from business disruption, productivity losses, fines, penalties, and settlement costs, among others aren’t simply abstract risks. They’re real, recurring, and measurable, and they don’t stop with the fine itself.

Beyond the fines themselves, legal costs are a significant and often underestimated component of non-compliance.

This gap between compliance and non-compliance provides evidence that organizations do not spend enough of their resources on core compliance activities. If companies spent more on compliance in areas such as audits, enabling technologies, training, expert staffing, and more, they would recoup those expenditures and possibly more through a reduction in non-compliance cost.

While the math here is straightforward, the strategic case is even clearer. Compliance isn’t overhead; rather, it’s an investment with a measurable, proven return.

The hidden costs: Legal fees, fines & reputational fallout

Regulatory fines get the headlines, but they represent only part of what non-compliance actually costs an organization — a cost that has only risen over time. As of February, a total of 2,394 fines of around €5.65 billion have been recorded in the database, which lists the fines and penalties levied by European Union authorities in connection with its General Data Protection Regulation (GDPR).

Beyond the fines themselves, legal costs are a significant and often underestimated component of non-compliance. Regulatory norms are shifting constantly and navigating them requires specialized expertise. As quickly as the rules change, outside counsel and compliance specialists must keep pace, and that knowledge comes at a price. Every alleged compliance violation triggers an immediate need to engage qualified counsel, adding to a cost burden that compounds quickly and unpredictably.

Then there is reputational damage, perhaps the most enduring consequence of all. The cost of business disruption, including lost productivity, lost revenue, lost customer trust, and operational expenses related to cleanup efforts, can far exceed regulatory fines and penalties. Consider , whose compliance failures around its anti-money laundering (AML) efforts became a cautionary tale for the industry. TD Bank’s massive $3 billion in fines from US authorities wasn’t just the result of a few missteps; rather, it was caused by years of deep-rooted failures in its AML program, pointing to a culture that prioritized profit over compliance.

The findings from both the 2011 and 2017 studies provide strong evidence that it pays to invest in compliance.

TD Bank’s failure to make compliance a priority not only led to a huge fine but also seriously damaged its reputation, with revising TD’s outlook to negative in May 2024, where it remains. This is the kind of a reputational stigma that can take years to repair.

Leveraging compliance as a competitive advantage

There is also a positive side of the ledger that often goes unacknowledged. A robust compliance program signals to investors, partners, and clients that an organization is well-governed and trustworthy. That reputation doesn’t just retain market value; it actively attracts it.

Organizations that cut corners in compliance risk engaging in a short-sighted, high-risk strategy that will ultimately result in a negative outcome for the organization. Businesses that take compliance seriously tend to operate with greater predictability, fewer surprises, and stronger stakeholder confidence.

The 2017 Ponemon and Globalscape and study found that, on average, only 14.3% of total IT budgets were spent on compliance then, not much of an increase from the 11.8% reported in 2011. This clearly indicates that organizations are underspending on core compliance activities in the short term and aren’t prepared to allot further resources as the years go on. That gap represents not just risk, but a clear missed opportunity.

“The findings from both the 2011 and 2017 studies provide strong evidence that it pays to invest in compliance,” explains Dr. Larry Ponemon, Chairman and Founder of the Ponemon Institute. “With the passage of more data protection regulations that can result in costly penalties and fines, it makes good business sense to allocate resources to such activities as audits and assessments, enabling technologies, training, and in-house expertise.”

The organizations that recognize compliance as a strategic function, not a reactive one, are the ones that will earn the trust of clients, the confidence of investors, and the operational resilience to weather an increasingly complex regulatory environment. The data is clear, and the choice is a critical one.

You can find out more about the challenges faced by corporate compliance professionals here

Key takeaways:

• • • The US achieved conventional military dominance, but it hasn’t solved the core problem — The navy that was destroyed was never the one controlling the Strait of Hormuz. The asymmetric force that is, the IRGCN, retained 80% of its small-boat fleet and may be able to replenish losses from civilian infrastructure faster than the US can eliminate them.

    • All three pathways to a quick resolution are blocked — The regime has hardened rather than collapsed, the diplomatic positions are nowhere near overlapping, and the US military posture is escalating, including possible ground operations, while allied support remains symbolic.

    • The conflict is likely measured in quarters, not weeks, and the economic difference is not linear — Businesses should be stress-testing against sustained disruption rather than planning for a return to normal, because the conditions required for a rapid resolution would each need to break favorably — and right now, none of them are.

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This is the first of a two-part series on the impact of the war with Iran as the conflict continues. In this part, we look at different ways the war could wind down quickly, and why none of them offer an immediate pathway.

The war with Iran is not going to be over by the end of this week.

That sentence shouldn’t be controversial four weeks into the ongoing war with Iran being waged by the United States and Israel, but it runs against the grain of how markets, policymakers, and many business leaders have been processing this conflict. The dominant assumption, visible in equity markets that have wobbled but not cratered, is that this is an acute shock with a definable end date.

However, very little about the military, political, or strategic picture supports that assumption.

While I make no claim to predict the war’s exact duration, I can lay out why the most likely scenarios point to a conflict measured in quarters, not weeks — and why that difference matters. In the next part of this series, we’ll sketch the economic consequences on a quarter-by-quarter basis, drawing on the latest projections from top economic thinkers. First, however, here is why this war probably drags on.

The wins aren’t winning…

By a surface level scorecard, Operation Epic Fury has been exactly the kind of lopsided success one would expect of a global superpower that’s going up against a regional player. Iran’s Supreme Leader was killed in the opening strikes, Iran’s conventional navy was sunk at anchor before they could sortie, and full air supremacy by the US appears established. If you were grading this on the metrics that won wars in the 20th century, you’d be forgiven for thinking it was nearly over.

Yet it is not nearly over. The Strait of Hormuz remains effectively closed. Daily transits have collapsed from 138 ships to fewer than five. Approximately 2,000 vessels and 20,000 seafarers are stranded in the region with nowhere to go. Brent crude is at $108 per barrel as of March 26, up roughly 50% since the war began. The International Energy Agency has called the current situation the largest disruption to global energy supplies in history.

The disconnect between the military scorecard and the strategic reality comes down to a single, underappreciated fact that the US destroyed the wrong navy. To be fair, it’s not like they had much of a choice. Iran’s conventional fleet had to go, and it went; however, that was playing on easy mode. Iran’s conventional fleet, its frigates, corvettes, and submarines, was a prestige force built for Indian Ocean power projection.

You can find out more about the here

The force actually designed to fight America, however, is the Islamic Revolutionary Guard Corps Navy (IRGCN), and it is something else entirely: a dispersed network of hundreds of armed speedboats, coastal missile batteries, thousands of sea mines, drone systems, and midget submarines spread across dozens of small bases along hundreds of miles of Persian Gulf coastline. The IRGCN’s entire doctrine, training, and equipment procurement were optimized for exactly one scenario, that of denying the Strait of Hormuz to a technologically superior adversary. That is the war Iran is now fighting.

Even though the IRGCN lost its most advanced platforms, those were not the workhorses of their fleet. The IRGCN retains an estimated 80% of its small-boat fleet, the fast boats that hide among fishing dhows, the crews that can scatter onshore and remount on surviving craft. The US is tasked with the mission of hunting small boats hiding among civilian vessels, in a fight in which Iran is willing to lose dozens of them a day to keep the Strait closed. This is not a mopping-up operation; rather, it is a war of attrition that the US is not structured to win quickly, and one in which Iran can replace its losses in ways a conventional navy cannot. For the US, it’s like trying to empty a bathtub while the spigot is still running.

Further, the math of the Strait itself is unforgiving. Iran had an estimated 5,000 sea mines before the war and has begun laying them. The US Navy decommissioned its last Gulf-based minesweepers in 2025 — timing that, in hindsight, looks catastrophic.

Indeed, the US can sink every major Iranian warship afloat and still not reopen the waterway. That, in fact, is roughly what has happened.

…And the off-ramps are blocked

If conventional military victory hasn’t solved the problem, there are three other ways this war ends quickly. As of late March, however, all three are jammed.

1. The regime isn’t collapsing

A US intelligence assessment completed before the war concluded that military action was unlikely to produce regime change even if Iran’s leadership was killed. That assessment has proven accurate. Iran’s constitutional succession mechanism activated as designed, and a new Supreme Leader, the previous one’s more hardline son, was installed within days. Also, protests are not sweeping the streets. Ideological regimes under external threat tend to harden, not fracture. Indeed, both the Taliban and Hamas have survived worse. The Iranian Islamic Republic, whatever else you want to say about it, appears to be surviving this conflict as well.

2. Diplomacy has nowhere to go

Iran rejected the 15-point plan offered by the US and published five counterdemands, including recognition of Iranian sovereignty over the Strait of Hormuz, which is a nonstarter for the US. Iran’s foreign minister says Tehran has no intention of negotiating, even as President Donald J. Trump insists talks are continuing. These positions aren’t close to overlapping, and both sides are staking their credibility on not budging first.

And Iran has good reason to believe time is on its side. The war is deeply unpopular in the US and the same affordability anxiety that swept Republicans into power is now threatening to sweep them out in the midterms. Tehran knows for every day the war goes on, they get to roll the dice that Trump will back out, giving them a strong incentive to get as many rolls as they can.

3. The military posture is escalating, not resolving

Ground troops, including paratroopers from the 82nd Airborne, are en route to the Gulf or have received deployment orders. Reports indicate the White House is weighing a seizure of Kharg Island, Iran’s primary oil terminal, an operation that would put American boots on Iranian soil for the first time. Seven allied nations signed a statement supporting Strait security, but it’s a paperwork alliance, lacking the kind of committed hardware needed to force a solution to the Strait’s closure.

What does this mean for business?

The Iranian regime isn’t folding, diplomacy doesn’t seem to be catching on, and the US military posture is expanding. None of the conditions point to a rapid resolution, and in fact, several of them point to a prolonged conflict.

If this war is measured in quarters rather than weeks, the economic consequences stop being a temporary, albeit painful price spike and start being a structural disruptive event, one that reshapes supply chains, reprices risk, and forces companies to make hard choices about where and how they operate. The difference between a three-week war and a three-quarter war is not a difference of magnitude, it is a difference in kind.

In the concluding part of this series, we’ll walk through what a quarter-by-quarter economic scenario would look like if the war continues.

Key highlights:

• • • Tax credit transferability survived intact— The OBBBA preserved Section 6418 transferability rules despite earlier proposals to sunset or repeal them.

    • AI-driven data center boom may revive renewable energy tax credits— With data centers projected to consume 12% of all US energy by 2028, large operators have strong incentives to advocate for preserving and expanding renewable tax credits to meet massive energy demands through solar, geothermal, and battery storage solutions.

    • 2026 market conditions favor buyers due to supply-demand imbalance—Increased supply of tax credits (particularly Section 45Z clean fuel production credits) combined with reduced buyer competition from provisions like Section 174 and bonus depreciation has created advantageous pricing.

At the start of the current Trump administration, green energy tax credits were expected to be slashed or disappear altogether. In reality, significant changes emerged instead of ceasing to exist. More specifically, the One Big Beautiful Bill Act (OBBBA), passed in July 2025, kept the transferability rules around green energy tax credits intact.

As a result, the market for these credits remains robust in 2026 and 2027, says , an energy tax authority and principal at accounting firm CliftonLarsonAllen (CLA). In addition, multiple credits still have runway, and near-term dynamics in 2026 may favor buyers.

OBBBA’s changes result in shifts in marketplace conditions

When the OBBBA bill passed, the specifics revealed a more optimistic picture than many understand. According to Hill, specific examples include:

• • Wind and solar projects — Developers that begin construction by July 4, 2026, still have a four-year window to complete their projects and still claim credits. Even projects that miss this construction deadline can qualify if they’re placed in service by December 31, 2027.
  • Clean fuel production credits — Clean fuel production credits, detailed in OBBBA’s Section 45Z, received an extended runway through 2029.
  • Tax credit transferability — The tax credit transferability aspect under Section 6418 remained whole, despite previous versions of the bill proposing either a sunset date or outright repeal of transferability. This fact provides a level of marketplace certainty that can act as critical liquidity for developers that typically lack the tax liability to use credits themselves.

In addition, the legislation altered the buyer and seller environment. Provisions including OBBBA’s Section 174 and bonus depreciation generated additional deductions for certain companies, and as a result, reduced those companies’ 2025 corporate tax liability. Simultaneously, Section 45Z clean fuel production tax credits came into force and created a supply-demand imbalance that favors buyers.

Overall, in the latter half of 2025, Hill describes the marketplace as favorable for buyers because of an increased supply of tax credits that were for sale previously with fewer buyers. Into 2026 and beyond, both developers and corporate buyers still have significant opportunities to participate in the tax credit marketplace, explains Hill.

AI-related data center demand may spur new proposals for renewables tax credits

The explosive proliferation of data centers because of the growing AI demand across the United States may become the unexpected champion for renewable energy tax credits. Hundreds of facilities are currently under construction, and the energy demand implications are staggering. In fact, the projects that by 2028, data centers will consume 12% of all US energy.

Renewable energy technologies are emerging as essential solutions to meet these demands. Solar power, as a tried-and-true technology, offers ideal supplementation for data center operations; and geothermal heating and cooling systems directly address the massive temperature control challenges these facilities face. Perhaps most significantly, battery storage is rapidly becoming standard operating procedure, with both grid-based and solar-array-tied battery systems providing critical backup power.

These developments carry substantial policy implications. In fact, large data center operators have incentives to become vocal advocates for preserving and expanding renewable tax credits, says , a leader in federal tax strategies at CLA. “We want our AI, we want our cloud-based services. To do that… we need massive data centers and massive computing demands,” DePrima explains. “And that in turn requires massive amounts of energy consumption, which renewables can certainly supplement.” This, in turn, creates the potential for a renewable energy tax credit “comeback” within two to three years, he adds.

Guidance for buyers and sellers

Looking ahead to 2026 and beyond, both buyers and sellers of renewable energy tax credits should recognize that significant opportunities remain despite regulatory changes. More specifically:

For buyers — Buyers should act now to capitalize on favorable market conditions. With increased credit supply and reduced buyer competition due to provisions like Section 174 and bonus depreciation, pricing has become more advantageous. Buyers of renewable energy tax credits should consider structuring 2026 transactions to directly offset estimated tax payments throughout the year, thereby improving cash flow by making payments to sellers rather than the IRS. Financial institutions remain particularly well-positioned as buyers, as many have explored tax credit carryback opportunities to increase their tax savings even further.

For sellers and developers — Renewable energy tax credits sellers and energy project developers can use tax-credit monetization as a critical component of project financing because the ability to convert credits into immediate cash proceeds is essential for paying down debt and funding new projects. Despite initial concerns, substantial opportunities remain with credits outlined in Sections 45Z, 45X, 48E, and 45Y which are transferable and viable through 2029 and beyond.

In either case, tax credit transferability under Section 6418 offers key opportunities in the marketplace. Whether buyers are looking to reduce their corporate tax burden while supporting clean energy goals, or developers are seeking to monetize renewable projects — tax credits offer incentives to move forward.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, or tax advice or opinion provided by CliftonLarsonAllen LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of nontax and other tax factors if any action is to be contemplated. The reader should contact his or her CliftonLarsonAllen LLP or other tax professional prior to taking any action based upon this information. CliftonLarsonAllen LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

You can find out more about renewable energy tax credits here

Key insights:

• • • Geopolitical crises fuel financial volatility and illicit activity — Conflicts have traditionally accelerated capital shifts and flows, creating cover for bad actors.

    • Predictable patterns emerge — Financial institutions should watch for sudden cross-border activity, unusual cash deposits, and transactions from border areas.

    • Conflict zones enable black market expansion — They also should adapt their compliance systems to detect more sophisticated methods used by criminals, tightening screening and enhancing staff training.

While business and international politics may appear cold and calculating, these things are often driven by emotion, especially fear — and fear of instability often drives market volatility.

So it goes as the United States attacks one of the world’s largest militaries and supporters of regional terror groups, causing deepening instability in a Middle East already beset by violence. It is certain that there is already a surge of money flowing in and out of the region for different reasons. Legitimate and illegitimate actors alike will seek to both run away from the crisis and profit from it. However, there are some anti-money laundering specific thoughts that financial institutions need to consider during a time of global uncertainty.

The bottom line — lots of money is on the move. Funding will send aid groups towards the crisis; it will also send logistical supplies, war material, and other necessities. All of these cost money, and defense sectors in multiple countries will be pumping out munitions to refill stockpiles in any country that is related to or in the neighborhood of the conflict.

Not every large transaction is an unusual, reportable event, but financial institutions now need to look one or two layers below the surface. What does not seem related on the surface is always a red flag. Look at beneficial ownership of companies and vessels, look at relations of the owners, not just the Ěý(OFAC) results of those people themselves. The financial system will, and should, allow the legitimate funds to flow. However, financial investigators must remain diligent to catch bad actors that take advantage of the surge in non-profit activity or the urgency with which legitimate businesses operate in a conflict zone.

Risk Factor 1: Capital flight from regime change

Just as the fall of the Al-Assad regime in Syria caused family funds to flow to as regime members fled the country, you will see the same with politically exposed persons (PEPs) who are inevitably fleeing regime change in Iran. A political crackdown will come. Whether the victors are on the side of the West or not remains to be seen, but some factions are going to flee the country and take family wealth with them.

Banks and other financial services should watch for anyone connected to people moving money through neighboring countries in which they may have literally hiked or driven before depositing cash into a financial institution. There are stories of refugees leaving places with gold bands on their arms, cash and false bottom purses, and diamonds in the lining of sweaters. These things will be converted to cash in neighboring countries and put into financial systems less affected by the conflict. An influx of cash throughout the region, therefore, could indicate this type of capital flight.

Risk Factor 2: Illicit finance and black markets

Since the fall of Syria, we have also become aware of that helps fuel addiction and armed conflict. There are certainly other substances and drug trafficking networks about which we know very little on this side of the secrecy veil.

Therefore, this instability will be seen as a time of opportunity for criminal groups. Indeed, with Assad’s security forces no longer controlling middle eastern captagon and other narcotics trade and various armed groups looking for funding sources, this is an illicit business opportunity.

Financial institutions can expect rapid movement of money between unrelated shell corporations, new corporations, and shadow vessels. They also should expect the black market to boom with drugs, contraband Iranian oil, and funds tied to narcotics that they have only yet to discover. Illegal arms will also generate funding, so all of the methods, both formal and informal, used to transfer value will become active.

In fact, large portions of such funding will flow through financial institutions; and peer to peer payment providers, FinTechs, and money transmitters should be especially wary of funds moving rapidly through their platforms. A burst in conflict means a burst in activity from illicit sources; therefore, enhanced, targeted monitoring is a must.

How financial institutions’ risk & compliance teams should respond

First, all financial institutions’ risk & compliance departments need to assess their institutions’ OFAC and sanctions screening search parameters. This is a good time to dial up fuzzy logic capability and reduce match percentage thresholds. In other words, risk tolerance should go down while the metaphorical dragnet gets wider. Surge the department’s personnel capability to compensate if you have to, because that is better than a strict-liability OFAC fine. Remember, OFAC sanctions are closely tied to national security, especially when it comes to Iran. This is not an arena in which leniency can be expected. Compliance teams should look at monitoring systems and thresholds immediately, create geographical targeting models to cover the conflict zone, and consider a command center approach to deal with the fluidity of the situation until things settle.

If your institution has not already taken the hint from regulators, this also is an opportunity to double down on Customer Due Diligence and identity verification. Front line staff and embedded business compliance personnel should receive updated training and job aids to increase awareness and hone internal reporting. Indeed, it is an advanced business skill to understand complex corporate beneficial ownership, much less to detect when it may be tied to illicit activity or corrupt regimes. Now is the time to increase that level of knowledge and thereby make the culture of compliance more robust.

In every crisis there is opportunity as well as risk: Managing the risk allows every company to take advantage of the opportunity, shore up its mission, and strengthen the institution.

You can find out more aboutĚýthe geopolitical and economic outlook for 2026Ěýhere

Key insights:

• • • Pushing innovation in the financial sector — The OCC is actively enabling innovation among financial service institutions, not resisting it.

• • • Regulation is being refocused, not removed — Priorities may change with each administration, but oversight remains, and crypto is increasingly central.

    • Compliance is a growth requirement — Regulations around the BSA, sanctions, and KYC still apply, so durable controls and experienced teams do matter, even with AI.

Shortly after being named Acting Director of the Comptroller of the Currency in early 2025, Rodney E.ĚýHood in the financial sector. Hood spoke about improving bank-fintech partnerships and providing regulatory frameworks for digital asset activities.

As expected, the Hon. Jonathan V. Gould was sworn in as the 32nd on July 15, 2025. Under his leadership of the Office of the Comptroller of the Currency (OCC), the spigot of technology-enabled financial innovation is set to remain wide-open, with blockchain-based products at the forefront.

In his speech to the , Comptroller Gould laid out a road map to a future that includes more de novo charters, with many of them coming from the ranks of blockchain and digital or virtual asset service providers (VASP). He refuted notions that these things cannot be done under current rules and reaffirmed the agency’s ability to regulate such institutions.

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Institutions that fail to embrace these emerging technologies as they arise risk falling behind, Gould said, describing how any legal framework that treats digital assets differently than existing electronic means is risking “a recipe for irrelevance.” Such an antiquated approach keeps companies, institutions, and indeed the nation’s entire financial system, mired in the past, he added.

Digi-mon go!

In word and deed, the current OCC continues to offer a green light to VASPs as well as to traditional financial institutions that are looking to dabble with blockchain, stablecoins, and the like. Regulatory action in the past year mostly served to end prior enforcement against traditional institutions while putting ancillary companies in check. For example, of US/Mexican border casinos, crypto ATM-style terminals, and armored car companies demonstrates the regulatory shift that takes place after each change in administration.

Government rarely gives up its authority, but it does shift the focus. Border cash is out, crypto is in. Clear regulation for this sector is important, necessary, and will continue to create an entirely new set of financial products & services.

Institutions that fail to embrace these emerging technologies as they arise risk falling behind… [and] any legal framework that treats digital assets differently than existing electronic means is risking ‘a recipe for irrelevance.’

Normally I advocate more caution but, in this case, having any regulation is better than having no regulation. Blockchain is here to stay and having any kind of clarity around it is the right way to begin. Those who legislate have an opportunity to improve the regulatory framework over this technology as it evolves — as long as a framework exists. It’s sort of like the slippery slope argument in reverse: When we build a foundation on regulations that encourage innovation while protecting consumers, including the companies themselves, we create a healthier economy. These rules can always be improved and adjusted as we understand better what we have unleashed upon the world.

Compliance is on the “can’t cut” list

Rumors are swirling of cuts to many corporate compliance budgets. Many compliance pros think this administration will let companies do as they please! Let a professional risk manager urge caution here instead. The power of the Bank Secrecy Act (BSA), the extraterritorial reach of sanctions, and the requirements to know your customers (KYC) are not going anywhere. Regulations are refocused, not removed. A proliferation of nouveau financial institutions will provide a target-rich environment for the regulators of today and tomorrow to find things they dislike and prosecute those offenses. A business that hopes to make it big should be built to withstand the winds of change and weather different regulatory conditions over time.

Therefore, smart compliance professionals will keep an eye on the horizon and keep their risk controls tight. Yes, it may be a good time to start a crypto company; but no, that does not mean you can process drug cash, ignore sanctions, or fail to collect basic personally identifying information.

With increasingly ubiquitous AI tools, your humans in the loop are more important than ever. As entry level jobs become automated, depth of experience becomes more valuable. Retain talent and institutional knowledge on your compliance teams because those individuals will train the AI as well as the investigators of tomorrow.

Indeed, no matter who is in charge of the government’s regulations, enforcement will come when you let your guard down and ignore basic risk management principles.

You can find more about how government agencies are managing various risk, fraud, and compliance issues here

Key takeaways:

• • • Real-time oversight and strict compliance — Mexico’s SAT now requires digital platforms to provide real-time access to transaction data and withhold taxes at the source, with severe penalties, including service blocking, for non-compliance.

    • Major technological and operational demands — Platforms must invest in secure, scalable systems for data sharing, billing, and cybersecurity, and small businesses likely will face extra challenges adapting to these requirements.

    • New roles for legal and tax professionals — Lawyers and accountants will be essential in guiding businesses through compliance, privacy, and operational risks, as well as supporting technology integration and adapting to the demands of Mexico’s digital tax environment.

Mexico’s digital tax overhaul is more than a regulatory update — it’s a fundamental shift that will reshape how businesses in that country operate online. By granting the Tax Administration System (SAT) real-time access to platform data, the government aims to curb tax evasion and strengthen collection in the digital economy. This means platforms like Amazon, Uber, Netflix, TikTok, DiDi, and Mercado Libre must now share transaction details as they happen, which will mean unprecedented compliance, technology, and operational challenges for companies and professionals alike.

Platforms must also — 2.5% for income tax (ISR) and 8% for value added tax (IVA). If a seller does not give a tax ID number (RFC), the platform will keep up to 20% of the payment; and, if the platform does not comply, SAT can block the service in Mexico until the problem is fixed. That means users will not be able to access the platform until it follows the law.

The goal of all this is to make tax collection fair and stop fake invoices and false transactions. The law also adds ; now, selling fake tax documents online can lead to two to nine years in prison.

These new tax measures also raise questions about with the United State-Mexico-Canada Agreement (USMCA or T-MEC), because some proposals — such as increased data access and stricter penalties for digital platforms — could conflict with the treaty’s provisions on cross-border data flows and platform liability.

Indeed, this shift is part of a wider digital transformation in Mexico, as seen not only with the new biometric CURP for identity verification, but also with SAT’s adoption of AI-driven smart auditing — both of which bring new opportunities and challenges for compliance, security, and public trust.

Technological impact on companies

These latest rules mean big changes for tech systems. Platforms must create secure connections for SAT to access their data, although they may use APIs or that send transaction details in real time.

Companies will need stronger cybersecurity policies because opening a permanent link to SAT creates risks, especially considering the high value of data that will be flowing through the system en masse. At a minimum, businesses will need to invest in heightened encryption to protect data, authentication systems to control access, and monitoring tools to detect unusual activity

Platforms also need to update their . Every sale must include correct tax retention and generate a digital invoice (CFDI). For larger platforms that process millions of transactions daily, this means building high-capacity systems to avoid delays or errors. These platforms will also need data pipelines to handle the huge volumes of information and, in turn, send that to SAT without slowing down the services of SAT or themselves.

Small companies and startups may face extra challenges. They might not have the money or staff to make these changes quickly; and they likely will require the assistance of technology providers or consultants to implement new solutions such as compliance-as-a-service and automated tax reporting software.

Challenges and opportunities for tax and legal professionals

For lawyers, these rule changes will create new work areas. Companies will need legal advice to comply with the new rules and protect user privacy. Lawyers, for example, can help draft policies, negotiate limits on data sharing, and design compliance programs.

There will also be litigation opportunities. Many that real-time accesses could violate privacy rights and even the Mexican Constitution, with legal challenges likely by companies as a result. However, due to the recent amendments to the Amparo Law, many of these lawsuits could be frustrated at the outset, because the new Amparo requirements demand the claim of direct and personal harm and impose stricter limits on judicial suspensions, making it harder for platforms to obtain effective protection against real-time monitoring.

For accountants and tax advisors, the challenge is operational. They must help businesses manage new tax retentions and keep accurate records. Many smaller businesses, especially in retail, will need help registering with SAT, issuing invoices, and recovering taxes withheld. Accountants will also need to plan for their clients’ as a result of the retentions potentially reducing liquidity.

Both professions are likely to see more demand for their respective services. Lawyers will focus on compliance and defense matters, while accountants will handle routine tax activities; however, both will be involved in technology integration. Professionals who combine legal or tax knowledge with these needed tech skills will have a big advantage.

Adapting to Mexico’s real-time tax landscape

Real-time tax monitoring is a major shift for Mexico’s digital economy, and it aims to increase tax collection and reduce fraud, but it also brings big risks and costs. And the success of this big fiscal change depends on balance. Authorities must ensure strong security and clear limits on data access, and they should also offer support to small businesses, either in educational or instructional fashion, to help those enterprises that may have fewer resources at their disposal to navigate this turbulence.

If implemented well, however, this system could make Mexico’s tax collection more efficient and fairer. If not, these changes could lead to privacy violations, higher costs, and even less participation in the digital economy by smaller entities.

Indeed, Mexico is entering new territory with these rule changes, and the world will be watching carefully as this could become a model for other countries’ digital tax compliance — or it could become a cautionary tale of what happens when technology and regulation collide without enough safeguards.

You can find out more about theĚýregulatory and legal issues impacting MexicoĚýhere

Key insights:

• • • The awareness crisis — Nearly half of Gen Z workers have never been exposed to local government career opportunities, which means that an entire generation enters adulthood unaware these jobs exist.

    • Values alignment paradox — Gen-Z individuals trust local governments more than other institutions, and they strongly align with public service values like making a difference and solving community problems.

    • Beyond salary solutions — Some cities are proving that targeted marketing campaigns can be successful; and connecting public sector work to meaningful impact rather than simply raising wages can attract interest.

San Francisco’s local government has been stretched to its breaking point. Mayor Daniel Lurie signed his this summer, which would eliminate 1,000 positions permanently, potentially resulting in layoffs for 140 employees. The city still grapples with a vacancy rate among its city workers that hit 13.7% two years ago, with . Residents have experienced delayed emergency responses, understaffed public hospitals, delayed city buses, and other gaps in public services.

State and local governments have sought workforce stability in the five years following the Covid-19 pandemic. Generational retirements, the so-called Great Resignation, a shrinking workforce, low unemployment rates, and heightened work environment expectations have had a dramatic impact over the last five years, leaving many states and public sector organizations trying a myriad of approaches to build and enhance their talent pipeline.

The root cause of our public sector workforce woes may surprise you. A decline in civics education in the classroom means that young people aren’t as exposed to government institutions as they once were. And many enter the workforce wholly unaware of the problems governments can solve or the career paths open to them within it.

Invisible institutions: Bridging the civics gap

Depending on your age, you may recall civics exposure as a mandatory part of your K-12 education. Civics education has been largely absorbed into the social studies curriculum, and the results are damning. Less than of one-quarter (22%) of 8th-grade students in the United States are working at a . Civics exposure and knowledge have a direct correlation to higher rates of voting and participation in civics activities, but currently, cannot name a single branch of the federal government.

Now, many states are taking matters into their own hands through legislative action, with states like requiring that all 8th graders take a civics test aligned with a year-long course on citizenship and federal and state government.

For adults already out of the K-12 system, the U.S. Chamber of Commerce Foundation piloted a geared toward employers in 2025. The Civics @ Work program addresses the unfortunate fact that an estimated 70% of Americans could not pass a basic civic literacy test. When civic awareness is low, young people enter adulthood with a limited sense of how government institutions function and what professionals are needed to keep those institutions running reliably.

Interestingly, members of the Gen-Z generation are quickly becoming the largest demographic in the workforce, but they are overwhelmingly not choosing public sector careers. Gen-Z members currently represent 18% of the US population but as of this past spring. A on civic learning and engagement found that while Gen-Z has higher rates of trust in organizations, they appear to be less likely to see themselves working there. And a McKinsey study on attracting Gen-Z talent into public service notes that this demographic is more likely than other generations to be aligned with public service values.

Rebuilding the pipeline through exposure

The city and county of Denver is no stranger to targeted public sector recruitment campaigns. The city and county have partnered with AOR, a Denver-based branding and marketing firm, in 2016 and in 2025 for public sector recruitment marketing efforts. The , for example, targets individuals in the hospitality, security, nursing, education, and coaching industries to consider a career pivot to public safety.

The 2025 city and county-wide campaign launched with AOR, , highlights career paths that many may be unaware exist within local government. Denver saw increased growth in both awareness, click-through rates on Google and LinkedIn, and an increase in job application rates.

Successful methods in this area could potentially find a wide audience, research shows. Mission Square Research Institute’s on undergraduate attitudes toward careers in public service notes that business, accounting, and finance undergraduate students had the lowest level of awareness around public sector career paths. Exposure to a public sector career path is just the beginning, however, these organizations need to connect to the issues young people care about and demonstrate that a public sector career offers meaningful work and growth opportunities.

Investing in the next generation of public servants

Mission Square’s findings noted that in 2025, undergraduate Gen-Z students are prioritizing salary, work/life balance, personal satisfaction, and job security. Those students who were surveyed perceive government salaries as negative (when compared to the private sector).

How the public sector paints the picture of a career is crucial to success and presents an opportunity for recruitment. Gen-Z, as a demographic, is highly motivated by public service values, and can relate strongly to messaging around making a difference, solving local problems, and delivering real impact. The Minnesota Citizens League report on points out that employers should consider loosening restrictive job requirements (such as degrees, years of previous experience, etc.) and instead recruit for mindset and soft skills and invest in the talent development of younger employees.

This doesn’t come without some risk, of course. Job tenure for younger workers averages 2.8 years — less than one-third of the tenure of Baby Boomers and Gen X in the workforce, according to Mission Square.

Civics education as the first step, not the final one

As San Francisco is reconciling, increasing wages can’t always be the final solution. Exposure and education around public sector opportunities are a critical first step to building a workforce pipeline. Legislative approaches taken in recent years at the state level — include for example, requiring student-led civics projects in middle and high schools; and forming a task force to study civics education, engagement, and media literacy — can certainly help, because civics education alone is likely insufficient.

Students need a formal introduction, in K-12 and beyond, to public sector opportunities, and these introductions should address the stereotypes that government is inefficient, clarify the non-political role of day-to-day operations, and highlight meaningful work, problem-solving, and personal career satisfaction.

For those governments and local organizations that are already struggling with persistent vacancies and a shrinking workforce, investing in the student pipeline is essential.

You can find out more about the challenges around talent and other issues faced by government agencies and their workers here

Key insights:

• • • Fraud prevention presents systems challenges — In the current advanced tech-enabled environment, AI-driven tools in the public sphere need human coordination and oversight to be employed properly.

    • The intangible cost of fraud is public trust — When public programs that are designed to support vulnerable populations fall victim to exploitation, confidence in the ability of government-administered programs falters.

    • The full scope of fraud is unknown — Many improper payments from government programs aren’t criminal. It’s that we need better data, clearer definitions, and a stronger understanding around what fraud truly is.

As public programs and the scale of fraud become the subject of national and state political discourse, more state governments and public sector agencies are evaluating the potential of data analytics and AI tools to curb fraud. As these institutions are realizing, effective fraud prevention is easier said than done, and investment in new detection tools will fail to keep pace with fraud if they don’t address structural, cultural, and coordination challenges.

Early fraud detection

Early detection of fraudulent activity, aided by AI tools and systems, may still be the most effective way to deter future problems. For example, California Community Colleges, the largest higher education system in the United States, currently serves more than two million students and has in two-thirds of its institutions in order to detect fake students. With open access for enrollment, the system is a magnet for fake students who apply, enroll, and fill seats in virtual classes that real students should be occupying, while fraudulently collecting federal and state student aid.

In 2024, it was estimated that nearly one-third (31%) of financial aid applicants at California Community Colleges were fraudulent, resulting in approximately $13 million in state and federal aid dollars being disbursed to fake students.

California Community Colleges employed a three-phased approach seeks to catch fraudsters who may slip through at the time of application, when they register for courses, and when they apply for financial aid. The system engaged in cross-agency collaboration with the California Department of Motor Vehicles and deployed a mobile ID system to authenticate student identity. Further, its data analytics looked at factors such as students’ IP addresses, time zones, age, and contact information to flag those patterns that could indicate a fake applicant. An AI tool analyzed course registration patterns, as well, identifying whether applicants have illogical or unusual patterns in the courses they are taking.

Then, system educators integrated into their virtual courses early on, requiring students to submit an introductory video, for example. This allows educators to cut non-participating students (presumed to be fake) before financial aid is disbursed.

These early detection tools, paired with human judgment, showed how a proactive approach can stop fraud before funds are lost.

Gaming government systems

While fake students illustrate small-scale exploitation in California, provider fraud is where large dollar amounts and case complexity arise. When fraudsters illegally obtain Medicaid funds for services they never rendered, for example, individuals in need of services suffer.

Minnesota’s now-shuttered Housing Stabilization Services program intended to help move individuals who were experiencing housing insecurity into transitional and then permanent housing solutions. According to a , the well-intentioned program enriched sophisticated fraudsters, who formed business entities and falsified employee hours, reimbursement claims, and patient identities — even going so far as to manufacture false case notes as a precaution against their records ever being audited. Not surprisingly, illegally gained reimbursements were used to fund high living expenses, luxury shopping, and cars.

Similar fraudulent providers have been charged by the U.S. Attorney’s Office for the Northern District of Texas as part of . Four individuals fraudulently billed around $20 million to federally funded programs and other insurers.

In another case that showed that fraudsters sometimes can come from inside the house, a group of were ruled against by a federal judge in a whistleblower lawsuit alleging that four insurers and six health systems routinely, improperly billed the state’s Medicaid program. Part of the reason for the judgment was because the disputed claims were still paid by the Indiana Medicaid program, despite it being aware of alleged issues. In this case, oversight gaps and a consistent pattern of not flagging improper payments revealed a structural weakness within the state office.

Different approaches for data analytics

Some agencies are employing different methods to leverage advanced tech to help in the fight against fraud. For example, the Louisiana Department of Health is using AI to scrutinize Medicaid recipients and their eligibility. A developed at the University of Louisiana at Lafayette will allow the Louisiana Department of Health to share data with the state’s Office of Motor Vehicles. By analyzing whether individuals have duplicate licenses in other states, their eligibility to receive benefits in Louisiana may be rescinded.

Focusing on a different tack and target, the Center for Medicaid and Medicare will deploy a six-year pilot program of the across six states: New Jersey, Ohio, Oklahoma, Texas, Arizona, and Washington. The pilot program will specifically target low-value services with little to no clinical, evidence-based benefits and will expedite review of those services that are at a higher risk for provider fraud, waste, or abuse. This heightened scrutiny of providers seeking Medicaid reimbursement is in alignment with recommendations from the around program integrity.

These varying approaches raise a difficult question: Is it better to risk inefficiency by targeting providers, or it better to risk inequity by targeting recipients?

Understanding the measures of fraud, waste, and abuse

The total cost of fraud is difficult to calculate, as there are countless incidents of fraudulent reimbursement requests, overbilling, or unnecessary medical treatment that cannot be counted. Two data measures that we have to understand to truly gauge the efficacy of public health systems’ financial health are the payment error rate and the dollars recovered through fraud controls.

are those payments that fail to meet statutory, regulatory, or administrative requirements. They may be for non-eligible services, be inappropriately or inaccurately coded, or may exceed program maximum amounts — but their common denominator is that they represent funds that were misspent or out of step with fund guidelines.

Improper payments are calculated and reported to Congress annually across all federal healthcare programs. The dollar recovery rate calculates the amount of inappropriate reimbursements recovered from fraudulent actors each year, usually through the pursuit of civil or criminal damages. However, it’s important to remember that not all improper payments are lost to fraud. For example, within the Medicaid program were most often tied to missing appropriate documentation for individuals receiving care.

Understanding these definitions determines how we measure success, design large government systems, and allocate enforcement dollars across states. Such preventative measures, especially now aided by AI and other advanced tech, will help the next generation of fraud detection professionals who will come to rely on the tools and platforms that we design now.

And as more state governments and public sector agencies seek to leverage AI tools and platforms, they would be wise to focus on efforts that collect and analyze real-time participant data and incorporate ethical AI oversight, while balancing an investment in prevention as well as prosecution.

You can learn more about the challenges that government agencies face today here