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A joint analysis of data from 10 major Australian banks under the financial intelligence agency’s Operation Claw has identified wide-scale suspected mortgage fraud, predominantly linked to properties in Sydney.
The suspected activity involved inflated incomes, misrepresented employment and fabricated or unverifiable business activity used to support loan applications.
AUSTRAC has also identified cases where offshore or third-party funds were used to complete property settlements and make mortgage repayments, which the regulator said showed how false income streams and complex funding arrangements could facilitate access to the Australian property market.
Warning signs across lenders
AUSTRAC has said that the suspicious activity was not confined to one lender or borrower group, with recurring warning signs identified across participating banks.
These included falsified or misleading documents and the repeated use of mortgage brokers, accountants and law firms across multiple loan applications.
Commenting on Wednesday (19 August), 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,” 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.”
Lenders urged to review loan books
Fintel Alliance has provided the names of individuals and entities potentially involved in submitting 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.
These names have not been disclosed.
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.
AUSTRAC confirmed that some banking relationships have already been ended, with further action expected.
AUSTRAC has urged every mortgage lender in Australia to examine their mortgage books for signs of fraud, report suspicious activity and implement strong controls.
“Every lender should be looking closely at these findings and asking whether the same vulnerabilities exist in their own business,” 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.”
Australian Banking Association (ABA) CEO Simon Birmingham, said that the association welcomed the action and emphasised that the banking industry would work with regulators and law enforcement to combat the problem.
"This work has included intelligence sharing between banks and AUSTRAC through the Fintel Alliance which has already proven effective in uncovering fraudulent loan activity," he said.
Birmingham added that the ABA was advocating with banks for the introduction of the Australian Tax Office (ATO) data into the Consumer Data Right (CDR) as a means to provide lender with reliable, single-source data that would be less likely to fall victim to fraudsters.
"Verified ATO data would give lenders a single, trusted source of truth for a customer’s income and be a new tool banks could deploy to prevent loan fraud into the future."
'A system-wide response to a system-wide problem’
This latest discovery forms part of a wider string of investigations, arrests and enforcement action since the start of the year.
In February, the Commonwealth Bank of Australia (CBA) self-reported concerns to police and the corporate regulators regarding potential mortgage fraud totalling an estimated $1 billion.
Soon after, in April, brokers under aggregation group Finsure were implicated in allegations relating to suspected mortgage fraud, while in May, Financial Crime Squad detectives charged an ex-Hai Money broker and a former banker over connections to an alleged multimillion-dollar fraud and money laundering syndicate.
While mortgage fraud is not new, awareness of the problem, and what to do about it, is gaining currency.
Speaking to Broker Daily, brokers have backed National Australia Bank's call for a National Economic Crime Strategy, following reports that the scale of mortgage fraud in Australia could be as high as $4 billion.
In a statement, NAB echoed AUSTRAC’s sentiment, saying mortgage fraud was “complex, organised crime that spans industries and borders”.
“Tackling this threat effectively requires a step change in how banks, regulators, law enforcement, and government work together,” the bank added.
“This is a system-wide problem, and it requires a system-wide response.”
NAB itself revealed in June that it had “referred multiple parties to the appropriate authorities” and had “exited or suspended a number of parties from the bank” as it responded to what it described as a more sophisticated fraud environment.
However, as fraud becomes increasingly sophisticated, so too do detection and prevention efforts. Broker Daily has reported on the AI-driven “arms race” unfolding, as the same technologies enabling fraudsters are being deployed to defend against malpractice.
In April, CBA announced the development of an advanced agentic AI system designed to help detect fraud, which can monitor more than 80 million signals each day, including transactions, card and online payments, as well as interactions across digital banking channels.
Lenders are also increasingly using centralised repositories of information to identify and share suspicious loan applications, such as a central exchange powered by credit reporting bureau Equifax.
According to another report from Equifax, Australian lenders prevented more than $1.5 billion in fraudulent financial applications in 2025.
Brokers shore up their defences
Brokers themselves have spoken to Broker Daily about how they have upped their game in detecting and preventing fraud attacking the third-party channel.
New tools have also come online for brokers. Docuscan – an Australian AI-driven platform – recently announced the launch of FraudX, a new AI-powered fraud detection solution designed to help brokers and lenders uncover financial fraud hidden within document metadata.
Despite recent high-profile coverage, brokers have also pushed back against what they see as overly broad characterisations of the industry.
Indeed, Equifax data shows that third-party fraud listings account for less than 3 per cent of all fraud listings, with 31.6 per cent coming from first-party channel in 2025 (up from 26.2 per cent in 2024).
That fact, however, does not make brokers immune from fraud. According to research from Equifax, almost three-quarters of Australian mortgage brokers said they had been impacted by scams or fraud in the 12 months to September 2025 – a sharp increase from 26 per cent in the same period the previous year.
[Related: How can brokers combat fraud?]
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