Financial crimes watchdog warns lenders of fraud risk after referring brokers, lawyers and accountants to police and tax officials
Australia's financial crimes watchdog has referred hundreds of mortgage brokers, lawyers, accountants and high-risk companies to police, tax authorities and the corporate regulator, warning lenders of significant vulnerabilities in the home loan system, according to reporting by the Australian Financial Review (AFR).
The Australian Transaction Reports and Analysis Centre (AUSTRAC) said an investigation known as Operation Claw uncovered widespread potential mortgage fraud, including instances where ineligible borrowers attempted to move funds into Australia from China through illegitimate channels, AUSTRAC chief executive Brendan Thomas told the AFR.
Suspicious borrowers using shell companies
Thomas said suspicious borrowers were using shell companies, fake invoicing and falsified payslips to obscure the true source of their money, with much of it directed toward the local mortgage market through established referral pathways involving brokers, accountants and lawyers.
Mortgage fraud has been in the headlines since February 2026, when Commonwealth Bank (CBA), Australia's largest home lender, alerted regulators and police to concerning patterns in its loan book. What began as an estimated $1 billion exposure at CBA has since grown to at least $4 billion across the five largest banks, per the AFR's reporting.
AUSTRAC is now writing to 143 participants across the $2.5 trillion mortgage market – including payment companies that issue loans – urging tighter controls on lending and stronger measures against fraudulent activity. The agency has received roughly 1,800 suspicious matter reports from more than 100 lenders and industry bodies connected to the investigation.
Thomas said there was a "strong link" between the fraud and funds flowing from China and other parts of the Asia-Pacific, often routed through complex, multi-jurisdictional arrangements. Law enforcement is expected to lay charges as investigations progressed.
Analysis of 2,000 customers linked to 20 loan referrers – including brokers, accountants and lawyers – suggested potentially hundreds of millions of dollars in fraudulent loans within that group alone, the AFR reported. Thomas said banks were already ending relationships with implicated customers and referrers, and he anticipated further exits as lenders worked more closely with authorities.
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CBA chief executive Matt Comyn told the AFR last week that information-sharing between banks, regulators and police had proven highly effective in detecting fraud networks, though he added the bank had "not identified evidence of professional money laundering" linked to organised crime in its loan book to date.
Thomas also flagged separate money-laundering concerns in the real estate sector, where agents were brought under AUSTRAC's regulatory oversight in July. Real estate and conveyancing businesses accounted for 160 of the 266 suspicious matter reports received from newly regulated entities, with several already generating active investigations and arrests.
The scandal follows a string of related developments across the industry. MPA previously reported on the arrest of a mortgage broker-banker couple tied to Australia's largest alleged fraud syndicate, while ASIC commissioner Alan Kirkland recently addressed brokers directly on the growing mortgage fraud threat at the Mortgage & Finance Association of Australia (MFAA)'s national conference.
Major banks have also pushed the federal senate for greater access to tax office data to help verify borrower information at the source.
