Australia's financial crimes watchdog Austrac has identified potentially hundreds of millions of dollars in suspected fraudulent mortgages enabled by AI-generated fake payslips and forged company documents, after a joint investigation with major banks called Operation Claw.

The investigation, drawing on data from 10 major banks through the Fintel Alliance, found that criminals are using artificial intelligence to create counterfeit documents faster than lenders can detect them. The suspected fraud was mostly linked to houses in Sydney. "The scale of this activity should be a wake-up call for every lender," said Austrac CEO Brendan Thomas. "The same warning signs were found across banks that together cover the vast majority of Australia's mortgage market."

While the suspected fraudulent loans represent a small share of Australia's $2.6 trillion mortgage market, analysts say the findings show criminals have evolved faster than banks in deploying technology. Austrac did not find evidence of widespread money laundering, and no major fines are currently in play, Clancy Yeates reports for SMH business (AU).