AI is playing a crucial role in reducing wash trading in forex markets by detecting fraudulent trade patterns and ensuring market transparency. Wash trading occurs when traders place buy and sell orders simultaneously to create an illusion of market activity, misleading other investors. AI-driven machine learning algorithms analyze vast amounts of trading data to identify repetitive, self-executing trades with no real market impact. By using pattern recognition and anomaly detection, AI can flag suspicious trades in real-time. Natural Language Processing (NLP) also enhances monitoring by scanning news, financial reports, and trading forums for indications of coordinated manipulation. Regulatory bodies and financial institutions deploy AI-powered compliance tools to automate surveillance and generate risk alerts, reducing manual workload and improving enforcement efficiency. AI’s predictive capabilities further help prevent future occurrences of wash trading. While AI significantly enhances detection and prevention, human oversight remains essential to validate alerts and ensure accurate enforcement. Integrating AI in forex trading surveillance promotes fairer markets, investor confidence, and regulatory compliance.