Fintel Alliance uncovers coordinated mortgage fraud across major lenders

AUSTRAC's Fintel Alliance has published the results of Operation Claw, a joint analysis of data from ten major Australian banks that identified potentially hundreds of millions of dollars in suspected fraudulent home loans, concentrated mostly in properties in Sydney. The analysis identified recurring patterns including inflated incomes, misrepresented employment and fabricated or unverifiable business activity used to support loan applications, as well as cases where offshore or third party funds were used to complete property settlements or make mortgage repayments.

AUSTRAC found that the suspected fraudulent activity was not confined to a single lender or borrower group, and that the same mortgage brokers, accountants and law firms appeared repeatedly across multiple loan applications involved in the project. AUSTRAC Chief Executive Officer Brendan Thomas said the findings should be a wake up call for every lender, given that the warning signs identified were found across banks collectively covering the vast majority of Australia's mortgage market. AUSTRAC stated that the project did not identify evidence of widespread money laundering, but said the weaknesses exposed could be exploited by criminals seeking to move funds through the financial system.

AUSTRAC has referred the names of individuals and entities identified through Operation Claw to law enforcement agencies and regulators, reportedly including ASIC, the Australian Taxation Office and the Tax Practitioners Board. Participating banks have used the intelligence generated through the operation to identify potentially fraudulent loans already on their books, investigate suspicious activity and strengthen internal verification controls.