Australia’s biggest bank has informed authorities it is reviewing nearly A$1 billion of home loans that might have been secured using fraudulent applications and forged paperwork. This move has triggered inquiries from police and financial crime regulators, highlighting fresh challenges for lenders as criminals harness increasingly sophisticated techniques to get past checks.
The Commonwealth Bank of Australia told investigators it had identified a large number of loans where supporting documents appeared to be falsified or artificially generated. Police in New South Wales and the corporate regulator, the Australian Securities and Investments Commission, have been notified, as is AUSTRAC, the federal agency responsible for monitoring money laundering and terrorism financing.
The loans remain on CBA’s books and are reported to be performing, with repayments continuing and the mortgages backed by property. The bank has not said whether it has suffered losses from the matter. Shares in the lender moved lower on the news, reflecting investor concern over potential risks and regulatory scrutiny.
Regulators are exploring whether some of the loans were used in broader financial crime. AUSTRAC has indicated it is examining links to possible laundering activity, although there is no suggestion that CBA knowingly facilitated wrongdoing.
This episode comes as lenders grapple with more elaborate fraud techniques, including the misuse of advanced software to alter or fabricate income statements, tax records and identity records. Such methods have made assessing the authenticity of mortgage applications more complex than in the past. Experts say banks must balance speed of service with rigorous checks in an environment where fraud attempts are rising.
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