Australian regulator finds mortgage fraud across major banks

[SYDNEY] Australia’s financial crimes agency has identified coordinated mortgage fraud that could reach into the hundreds of millions of dollars following a review of the country’s major banks.

The Australian Transaction Reports and Analysis Centre found inflated incomes, misrepresented employment and fabricated business activity were used to support loan applications, the agency, known as Austrac, said in a statement on Wednesday (Aug 19).

The analysis spanned 10 banks and found cases where offshore funds were used to complete property settlements and make mortgage payments.

The findings point to vulnerabilities in Australia’s A$2.5 trillion (US$1.8 trillion) home lending market. Austrac urged greater vigilance among the country’s banks, and said that it wants mortgage lenders to examine their books for signs of fraud and implement strong controls.  

“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,” said Brendan Thomas, chief executive officer of Austrac.

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

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Austrac noted that the findings were the result of a coordinated data analysis through its Fintel Alliance initiative that brings together banks, regulators and law enforcement to identify financial crime. BLOOMBERG