Australian banks seek direct access to ATO data after AUSTRAC reveals widespread home loan fraud
Australia’s banks have stepped up their campaign to access individual tax records after AUSTRAC uncovered widespread mortgage fraud where borrowers have lied about their income.
Australia’s banks want access to the tax details of prospective borrowers after the Federal Government agency tasked with investigating financial crime uncovered widespread fraud with loan applications.
AUSTRAC has uncovered potentially hundreds of millions of dollars worth of mortgage fraud involving 10 major banks, mainly in Sydney.
Operation Claw identified suspected cases of home borrowers lying about their income and employment, including by fabricating business activity on their applications, in a bid to get into the Australian property market as higher interest rates make it harder to obtain home financing.
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By continuing you agree to our Terms and Privacy Policy.An investigation into the data of 10 major Australian banks found cases where third-party or offshore funds were used to complete property transactions or repay mortgages
AUSTRAC chief executive Brendan Thomas said the revelations highlighted vulnerabilities among Australian banks.
“The scale of this activity should be a wake-up call for every lender,” he said.
“The same warning signs were found across banks that together cover the vast majority of Australia’s mortgage market.”
Fraudulent applications typically included falsified or misleading documents and the repeated use of mortgage brokers, accountants and lawyers across multiple loan applications.
AUSTRAC found the mortgage fraud and suspicious activity as part of its intelligence-sharing Fintel Alliance with the banks designed to combat money laundering and terrorism.
“Every lender should be looking closely at these findings and asking whether the same vulnerabilities exist in their own business,” Mr Thomas said.
Australian Banking Association chief executive Simon Birmingham is calling on the banks to have access to Australian Taxation Office data on individual borrowers, rather than just relying on information from credit check companies Equifax and Experian about outstanding debts.
“Banks also continue to advocate for secure access to ATO income data which would help reduce the use of fraudulent loan documentation,” he said.
“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.”
The May Budget allocated $62 million over two years towards exploring the idea of expanding the existing consumer data right program where individuals can share their data with service providers of their choosing.
Under a possible data share expansion, consumers would be able to allow the banks to access their tax records automatically without having to directly provide their tax return to their bank or mortgage broker.
The Tax Administration Act 1953 makes it illegal for the ATO to disclose taxpayer information even where the taxpayer provides consent for disclosure.
The lobby group for Australia’s banks says they will continue sharing intelligence on customers in a bid to stop fraudulent loan applications.
“We welcome this action from AUSTRAC and the banking industry will continue to work with regulators and law enforcement to detect and stop suspected loan fraud,” Mr Birmingham said.
“This work has included intelligence sharing between banks and AUSTRAC through the Fintel Alliance which has already proven effective in uncovering fraudulent loan activity.”
Strict lending rules from the banking regulator require lenders to model a prospective borrower’s ability to handle a three percentage point increase in variable mortgage rates.
The Reserve Bank of Australia’s three rate rises in 2026 so far have also reduced the borrowing capacity of those wanting a loan, with the major banks now reluctant to lend someone more than five times their salary before tax.
To qualify for a loan, prospective borrowers are inflating their salary.
AUSTRAC also gathered intelligence from the tax office, NSW Police Force, NSW Crime Commission and the Australian Criminal Intelligence Organisation.
The Australian Prudential Regulation Authority, which regulates banks, and the Australian Securities and Investments Commission, the corporate regulator, also took part.
