By PAUL O’DONOGHUE, Senior Correspondent
TEN major Australian banks have identified potentially ‘hundreds of millions’ of dollars in suspected mortgage fraud, according to the country’s financial intelligence agency AUSTRAC.
The findings come from Operation Claw, a joint analysis of data from the banks. Most of the suspected fraud involved properties in Sydney.
AUSTRAC said its Fintel Alliance had uncovered “coordinated mortgage fraud and systemic weaknesses” across Australia’s lending sector. The agency did not name the 10 banks involved.
Brendan Thomas, AUSTRAC’s CEO, 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.”
The findings come less than two months after National Australia Bank (NAB), one of the country’s largest lenders, called for a scam crackdown amid a reported rise in mortgage fraud.
Multiple media reports suggest the scheme could involve up to A$4 billion ($2.8 billion) in home purchases.
Australian officials sound alarm on mortgage fraud
The Fintel Alliance, a public-private partnership between Australian banks and officials, has now found multiple cases where borrowers used offshore or third-party funds to make mortgage repayments.
“The activity was not confined to one lender or borrower group,” AUSTRAC said. “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 said the operation “did not identify evidence of widespread money laundering”, although it warned that criminals could exploit the weaknesses it uncovered.
The Fintel Alliance has provided law enforcement and regulators, including the Australian Taxation Office and Tax Practitioners Board, with names of individuals and entities potentially involved in submitting false documents.
Participating banks have used the intelligence to identify potentially fraudulent loans and investigate suspicious activity. AUSTRAC said some lenders have “ended” banking relationships, and expects further action.
The agency has urged mortgage lenders to “examine their mortgage books for signs of fraud” and report suspicious activity.
“The most effective way to stop mortgage fraud is before a loan is approved,” Thomas said. “Once a loan is established and the funds have moved, recovering the money becomes significantly harder.”
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