AUSTRAC’s Fintel Alliance has uncovered coordinated mortgage fraud and systemic weaknesses across parts of Australia’s lending sector.
Through Operation Claw, we analysed data from 10 major Australian banks and identified potentially hundreds of millions of dollars in suspected fraudulent loans. Most were linked to properties in Sydney.
What we found
The suspected fraud involved false or misleading information used to support loan applications, including:
- inflated incomes
- false employment
- fabricated or unverifiable business activity
- falsified or misleading documents
- offshore or third-party funds used for settlements or mortgage repayments
- repeated use of the same brokers, accountants or law firms across applications.
The activity was not limited to one lender or borrower group. While the project did not identify evidence of widespread money laundering, it exposed weaknesses that criminals could exploit.
A wake-up call for lenders
Our CEO Brendan Thomas said the findings were a wake-up call for lenders and highlighted the importance of identifying fraud before approving a loan.
“The most effective way to stop mortgage fraud is before a loan is approved. Once a loan is established and the funds have moved, recovering the money becomes significantly harder,” Mr Thomas said.
Participating banks have used intelligence from Operation Claw to identify potentially fraudulent loans, investigate suspicious activity, strengthen controls and refer matters to relevant authorities.
What lenders should do
Operation Claw shows the value of bringing information together. A single lender may see only part of a pattern, but sharing information across government, law enforcement and industry can reveal broader risks.
Lenders should familiarise themselves with our indicators of suspicious activity for the banking sector and non-bank lenders and financiers. You should also:
- review your loan portfolio for patterns or indicators of fraud
- verify identity, employment, income and supporting documentation
- look for common customer details across multiple applications
- monitor unusual activity involving brokers and other third parties
- investigate activity that does not match a customer’s profile
- report suspicious activity to us.
No single indicator necessarily confirms criminal activity. Consider the indicators together with your knowledge of the customer, their activity and your business risks.