Bloomberg

(Bloomberg) -- Australia’s assistant treasurer said anti-money laundering rules and the fight against scams are a key focus amid reports that mortgage fraud at Commonwealth Bank of Australia could amount to around A$1 billion ($700 million).

Daniel Mulino spoke at the Australian Financial Review Banking Summit on Monday. The AFR earlier said a Commonwealth Bank-commissioned report signaled loans based on doctored documents across the wider industry could amount to more than the earlier A$1 billion estimate.

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“I suspect that we are not at the bleeding edge,” Mulino said, referring to anti-money laundering laws. In the area of possible fraudulent mortgages, “perhaps more is needed.”

The AFR reported that top banks are working with the financial crimes watchdog to understand the extent of a potential mortgage fraud scandal.

Consumer credit reporting firm Equifax found that a number of customers who had obtained mortgages using fraudulent documents had also taken out loans with other banks, the AFR reported. Equifax didn’t reply to requests on the report.

Borrowers attempting to misrepresent their income or the value of their assets is a problem as old as the banking industry, Westpac Banking Corp. Chief Executive Officer Anthony Miller said at the conference. The level of sophistication “is a challenge” and “every bank has seen versions” of what CBA saw recently, he added.

Miller said banks need to “work as a collective” to share information on problem borrowers. They should seek prosecution of home loan brokers found to have submitted doctored information, he said.

“The criminality involved and the level of sophistication involved in how people misrepresent their income and their financials – it is a risk we are aware of,” Miller said.

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