AUSTRAC summons major banks over mortgage fraud spike

Financial intelligence agency AUSTRAC has summoned ten of Australia's largest banks to an urgent briefing following a spike in mortgage fraud.

Data requests were issued to the "Big Four"—Commonwealth Bank (ASX:CBA), Westpac (ASX:WBC), ANZ (ASX:ANZ), and National Australia Bank (ASX:NAB)—alongside Macquarie (ASX:MQG), HSBC, Suncorp, Bank of Queensland (ASX:BOQ), and Bendigo and Adelaide Bank (ASX:BEN).

The industry-wide sweep aims to determine the scale of "systemic" fraud after CBA alerted authorities to approximately $1 billion in suspect home loans linked to doctored applications and shell companies.

The meeting, led by AUSTRAC's data strategy experts and the Fintel Alliance, focused on identifying gaps in anti-money laundering protocols.

AUSTRAC CEO Brendan Thomas warned that criminal syndicates and potential bank insiders are exploiting the property market to wash illicit funds.

This follows revelations regarding the "Penthouse Syndicate," a network of brokers and bankers allegedly defrauding major lenders of hundreds of millions.

While banks may recover debts by selling seized properties, they face the looming threat of massive regulatory fines if found to have breached compliance obligations.

As government agencies ramp up efforts to seize assets funded by the proceeds of crime, the industry prepares for a multi-year forensic review of mortgage books to weed out nefarious applicants and internal threats.