AUSTRAC: Loan Fraud is the Main AML/CFT threat to Non-banks

  • Richard Marley
  • July 08, 2021
  • 2 minutes read
  • 90

AUSTRAC report states loan scams and identity fraud as the main threat to AML/CFT compliance when it comes to the non-banking sector. 

AUSTRAC has published a new report which assesses money laundering and terrorism financing (ML/TF) risks faced by the non-bank lending and financing sector. 

The Australian Transactions Reports and Analysis Centre provides insights on the following key points in its 51-page risk assessment:

  • Analysis of transaction reports (as well as other AUSTRAC intelligence)
  • Reports from partner agencies (including regulatory and law enforcement), and
  • “feedback and professional insights offered during interviews and consultations with a range of non-bank lenders and financiers, as well as industry experts and associations”.

AUSTRAC’s report aims to identify key ML/TF risks, allowing 600 non-bank lenders and financiers in Australia to identify and prevent risks associated with money laundering and terrorist financing, and report suspected crimes to AUSTRAC. 

While the assessment report does not lay down targeted steps related to AML/CTF compliance, the financial intelligence unit says it hopes the guide will allow the sector to enhance their risk assessment procedures and understanding of risk in the sector. 

A key statistic, highlighted in the report, states that 72% (1,632) of the total 2,279 Suspicious Matter Reports (SMRs) were related to loan application fraud, identity fraud, and welfare fraud. 

The assessment further adds that fraudsters use someone else’s identity to avoid making repayments or misrepresent their identity details to the non-bank lender for increasing their chances of obtaining finance. 

39% of these loan application frauds were conducted online, AUSTRAC stated. 

The regulatory body further adds:

“This shift exposes the non-bank lending and financing sector to cyber-enabled fraud, including fraudulent online loan applications and attempts to obtain loans using stolen or fraudulent identities.”

Suggested Read: Effective AML Compliance – Top 5 Tips for Businesses in Australia