CBA probes $1B in AI-driven mortgage fraud

Commonwealth Bank of Australia (ASX:CBA) has alerted police and federal regulators to a massive suspected fraud involving approximately $1 billion in home loans.

The nation's largest lender initiated the self-report following a sweeping internal review that uncovered a surge in "doctored" applications, many allegedly bolstered by sophisticated artificial intelligence to bypass traditional compliance checks.

The investigation primarily focuses on mortgages introduced via third-party brokers and referrers, such as real estate agents and accountants.

Investigators are scrutinising the use of shell companies, suspect deposits, and forged income documents.

While the scale of the probe is unprecedented, CBA noted that the bank is not currently "out of pocket," as the loans remain secured against property assets and most borrowers are maintaining repayments.

However, authorities are concerned the scheme may be a vehicle for money laundering, given the use of unexplained overseas funding and "dodgy" accounting practices.

The crackdown follows the exposure of the "Penthouse Syndicate," which allegedly defrauded NAB of $150 million.

CBA's intensified audit has highlighted the growing threat of AI-generated forgery.

Gary Gill, head of investigations at Kroll, warned that AI has made creating authentic-looking false identities and financial statements "a lot easier."

A CBA spokesperson stated the bank is facing "sustained and increasing levels of attempted fraud" and invested $900 million last financial year to bolster its cyber and financial crime defences.