By use case · Written by Yobel Tzegai · Last checked 9 October 2026
AI fraud detection under the EU AI Act: excepted from Annex III’s credit point and named nowhere else in it, but limited by the Article 5 profiling ban.
| Use | Usual outcome | Provision | What would change it |
|---|---|---|---|
| Flagging suspicious payments or transactions | Not high-risk | Point 5(b) of Annex III, which excepts detecting financial fraud | Using the same system to evaluate creditworthiness |
| Detecting insurance claims fraud | Not listed in Annex III | Annex III, which does not list it | Risk assessment and pricing for life or health cover, point 5(c) |
| Predicting a person will commit fraud from their profile alone | Prohibited | Article 5(1), first subparagraph, point (d) | Supporting a human assessment based on objective and verifiable facts |
| Profiling by or for law enforcement authorities | High-risk | Point 6(e) of Annex III | Not a private company’s own use |
Detecting financial fraud, by name. A system that both scores creditworthiness and flags fraud is still in point 5(b) for the scoring. AI credit scoring under the EU AI Act takes that side.
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The text names detecting financial fraud, inside point 5(b) on creditworthiness. Whether a given screening system detects fraud or does something else is a question of its intended purpose. A system that predicts a person will offend based solely on profiling is prohibited whatever its label (Article 5(1), first subparagraph, point (d)).
Yes, as one of your AI systems with its intended purpose, even when the outcome is not high-risk. The record is what shows why: point 5(b) of Annex III excepts it, and the Article 5 checks were made. Article 4 applies to it either way.