The Digitization of Fraud Detection
Mykhailo Fedorov was recently appointed as Ukraine’s new Defense Minister. There are a couple of interesting aspects of this appointment, including his background and age. In 2019, he was appointed Minister of Digital Transformation at the age of 28. He is currently 35, a generation younger than most NATO Defense Ministers. However, before discussing his new role, I will first outline his efforts in combating fraud, corruption, and waste.
I would refer to him as Mr. Fedorov, but it is hard for me to address someone so young as Mister, given that I am twice his age. Notwithstanding his age, I will congratulate him on his work overhauling Ukraine’s recordkeeping and administrative processes. His success in digitizing nearly all government processes, including paying utility bills, parking tickets, and other government services, has been hailed as transformative. His efforts to digitize more than 90% of the state’s bureaucratic processes ended decades of Soviet corruption and poor service almost overnight.
For anyone who has ever lived or worked in any of the republics of the former Soviet Union, you can relate to the process of collecting numerous (sometimes dozens) of documents and obtaining approval stamps from various local officials. During this process, any of them might well demand a bribe, and if you refuse to pay, your request stops right there. I guess you could call Fedorov Ukraine’s version of Elon Musk, except that his efforts were welcomed and praised by ordinary Ukrainians and international media. This process was also celebrated by members of the EU delegation supervising Ukraine’s EU membership application. Ukraine has long had a reputation for corruption, but much of it stems from its Soviet legacy. These practices still dominate all aspects of Russian life.
After Russia’s second invasion in 2022, Fedorov was given the responsibility for locating funding and expertise for the mass development of drones for the Ukrainian military. This initiative became critical for Ukraine’s survival in late 2023 when the United States Congress significantly reduced arms deliveries to Ukraine. During this period, much of the drone manufacturing was led by non-government entities, including Fedorov’s army-of-drones project. As this program expanded the quantity and lethality of Ukraine’s drones, the metrics of the war began to change. It has been estimated and verified by independent observers that 90% of Russian fatalities are the direct result of drone strikes.
After this expansion, Defense Minister Fedorov introduced a points system by which drone operators could score points for the destruction of Russian equipment or casualties inflicted on Russian soldiers. The best teams were then rewarded with the largest number of drones and those with the latest technology. The entire system was based on results, not on other meaningless criteria. Fedorov has now set a goal of 50,000 Russian soldiers to be killed in combat every month. Based on his track record, I have little doubt this will be achieved. Currently, Russia is losing an average of 1,000 troops per day.
Here is where these efforts will pay off as governments and private businesses continue to fight fraud, waste, and bureaucratic abuse. Machine learning has become the cornerstone of modern fraud detection. Fraud detection used to depend on human oversight, including audits and whistleblowers. Machine learning enables:
- Anomaly detection – identifying unusual behavior
- Predictive modeling – estimates of whether a transaction is fraudulent
- Real-time decision making – transaction can be flagged immediately
- Reduced false positives—reduces unnecessary transaction blocks
Reverting to the Ukraine conflict, it has been acknowledged that Palantir, an American data integration, analytics, and decision-support company, has been instrumental in supporting the Ukrainians with key military decisions, including military logistics and battlefield decision support to identify weaknesses in Russian strategy. Data analytics helps detect and classify enemy positions, troop movements, and equipment types much faster.
Palantir’s systems help visualize and recommend targets and shorten the sensor-to-shooter decision cycle much faster than any human could. The importance of predictive analytics will continue to grow, further augmenting traditional military intelligence and decision-making. How else would a much smaller country, like Ukraine, be able to hold a much larger country like Russia to a stalemate for 4 years if not for this type of intelligence? In my view, this type of analysis is part of a broader shift toward data-driven war planning and execution. The company also played a part in the recent removal of Venezuela’s President.
Ultimately, the goal is not just to detect and mitigate fraud but to do so while protecting users and clients without disrupting legitimate activity. What does all this mean? Does this mean that the human element will be removed from fraud detection? In my view, not at all; however, it will require balancing future innovations with ethical responsibility, compliance with existing privacy standards, and human judgment. Strong governance, transparency, and skilled human oversight are required for this to be successful and operational in fighting fraud.
There is still hope that these innovations will mitigate what has been uncovered in Minnesota and will likely be discovered in other government programs where elected officials looked the other way.
In closing, recent events involving large-scale fraud should make it clear to every American taxpayer that there is a need for a Department of Government Efficiency. I am not sure why this should be considered a partisan issue unless you are trying to hide something. If Ukraine can implement this strategy, then there is no legitimate reason other countries can’t.
I will add one more fact to support the need to continue our fight against fraud and government waste. The Pentagon has been required by federal law to have an annual audit since 2018. It is incomprehensible that this practice only started in 2018.
- Results so far: The Pentagon has consistently undergone these audits (eight years in a row as of fiscal year 2025); however, it has yet to receive an unqualified (clean) opinion on the overall department–wide financial statements.
- For the record, the Department of War has the largest budget of any federal agency.
This fact alone tells you all you need to know about the potential for fraud and abuse. How many publicly traded companies would be allowed to operate under these circumstances? And how many investors would purchase shares in a company that followed this practice?
And in case you are wondering, I believe Mr. Fedorov (there I did refer to him as Mister) will be President of Ukraine one day if he decides to stay in politics.
Prepared by Terry L. Stroud – February 2026
