AUSTRAC operation finds suspected mortgage fraud across Australian banks

AUSTRAC’s Fintel Alliance have identified coordinated mortgage fraud and control weaknesses across Australia’s lending sector.

The findings emerged from Operation Claw, which examined data from ten major Australian banks.

The operation identified potentially hundreds of millions of dollars in suspected fraudulent loans. Most were linked to properties in Sydney.

Suspect applications included inflated income claims, false employment details, and fabricated or unverifiable business activity.

Investigators also identified cases in which offshore or third-party funds were used for property settlements and mortgage repayments.

The findings indicated that false income streams and complex funding arrangements may be used to gain access to Australia’s property market.

The suspected activity was not limited to one lender or borrower group.

Common indicators across the participating banks included falsified or misleading documents.

The same mortgage brokers, accountants, and law firms also appeared across several loan applications.

AUSTRAC CEO Brendan Thomas said: “The scale of this activity should be a wake-up call for every lender. The same warning signs were found across banks that together cover the vast majority of Australia’s mortgage market.   

“While this project did not identify evidence of widespread money laundering, the weaknesses it exposed could be exploited by criminals seeking to abuse Australia’s financial system.”

Fintel Alliance has shared information on people and entities potentially involved in submitting false loan documentation with law enforcement and regulators.

The agencies include ASIC, the Australian Taxation Office, and the Tax Practitioners Board.

Participating banks have used the intelligence to identify potentially fraudulent loans, investigate suspicious activity, strengthen internal controls, and make further referrals to authorities.

Some banking relationships have been ended, while further action is expected.

AUSTRAC has urged mortgage lenders across Australia to review their loan books for fraud indicators, report suspicious activity, and strengthen their controls.

Thomas added: “Every lender should be looking closely at these findings and asking whether the same vulnerabilities exist in their own business. 

“Mortgage fraud succeeds when those fragments remain disconnected. Public-private information sharing allows government, banks and law enforcement to identify threats earlier and take coordinated action.”