AUSTRAC’s Fintel Alliance has uncovered coordinated mortgage fraud and systemic weaknesses across Australia’s lending sector.
A joint analysis of data from 10 major Australian banks identified potentially hundreds of millions of dollars in suspected fraudulent loans, mostly linked to properties in Sydney.
Operation Claw identified suspected mortgage fraud involving inflated incomes, misrepresented employment and fabricated or unverifiable business activity used to support loan applications. The project identified cases where offshore or third-party funds were used to complete property settlements and make mortgage repayments, demonstrating how false income streams and complex funding arrangements can facilitate access to the Australian property market.
The activity was not confined to one lender or borrower group. Recurring warning signs across participating banks included falsified or misleading documents and the repeated use of mortgage brokers, accountants and law firms across multiple loan applications.
AUSTRAC CEO Brendan Thomas said the findings exposed vulnerabilities across the lending sector that could not be addressed by individual institutions acting alone.
“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,” Mr Thomas said.
“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 provided the names of individuals and entities potentially involved in submission of false documents in support of loan applications to law enforcement and regulatory agencies, including ASIC, the Australian Taxation Office and Tax Practitioners Board, for intelligence purposes.
Participating banks have used intelligence generated through Operation Claw to identify potentially fraudulent loans, investigate suspicious activity, strengthen controls and make further referrals to the appropriate authorities. Some banking relationships have been ended, and further action is expected.
AUSTRAC has issued a call to arms to every mortgage lender in Australia, urging them to examine their mortgage books for signs of fraud, report suspicious activity and implement strong controls to shut this behaviour out of the Australian economy.
“Every lender should be looking closely at these findings and asking whether the same vulnerabilities exist in their own business,” Mr Thomas said.
“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.
“Lenders need to actively look for these warning signs, strengthen their controls and report suspicious activity to AUSTRAC. This is not something any institution can afford to ignore.”
AUSTRAC has worked with participating banks to identify practical controls that lenders can use to prevent, detect and disrupt mortgage fraud. It has issued multiple threat alerts outlining indicators of mortgage fraud to support risk-based assessments and improve detection and reporting.
The findings demonstrate the value of Fintel Alliance’s public-private partnership, which brings government, law enforcement and industry together to identify emerging threats and disrupt serious financial crime.
“Each bank may see only one fragment. When those fragments are brought together, the broader pattern becomes clear.
“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,” Mr Thomas said.
AUSTRAC worked closely with Australian banks, the Australian Taxation Office, NSW Police Force, NSW Crime Commission, Australian Criminal Intelligence Commission, APRA and ASIC throughout Operation Claw.
