Australian Banks Seek ATO Data Access to Fight Mortgage Fraud

Australia’s biggest banks told a Senate committee this week they need direct access to Australian Taxation Office (ATO) records to stop artificial intelligence from generating fake mortgage paperwork. Westpac and the Australian Banking Association (ABA) want tax data routed through the Consumer Data Right (CDR), the open banking system that has sat largely unused since it went live in July 2020.

The country’s largest mortgage fraud case so far ran on inside knowledge, not clever forgeries: bank employees who later became brokers, turning their own training against the checks meant to stop them.

Banks Want a Straight Line Into the ATO

ABA chief executive Simon Birmingham, a former federal Liberal minister, told the committee on Monday that banks are still handling some of their most sensitive verification the old way.

“Fraudulent loan documentation is a growing problem, and artificial intelligence is making fake payslips and doctored statements frighteningly easy to produce,” Birmingham told the inquiry.

The ATO is currently barred from sharing a prospective borrower’s information with a bank even when the customer asks it to, which forces applicants to gather and submit financial documents by hand. Birmingham described that process as “an anachronism in the digital age, unnecessarily burdensome for customers and creates unnecessary risk in our financial system.”

Westpac’s chief economist, Luci Ellis, told the same hearing the problem is a “burgeoning” one likely to worsen as more criminals realize what generative AI tools can do, according to the Australian Financial Review (AFR). Commonwealth Bank of Australia’s (CBA) executive general manager of financial crime compliance, Kylie Rixon, put a number on the wider cost, telling the inquiry that economic crime is a material productivity drain on the Australian economy. CBA has since rolled out its own AI system to flag scam patterns in transaction data.

Banks say three changes would close the gap:

• Direct verification, checking declared income against ATO records instead of manually submitted payslips and bank statements.
• A shared data pipe, routing tax data through the existing CDR system already used for open banking, instead of building something new.
• A legal fix, amending the Taxation Administration Act, the law that currently keeps ATO data locked away from lenders.

The federal government has already put money behind part of that ask. In the May budget, it pledged $62 million to extend the ability of consumers to share their ATO held data, a move Birmingham welcomed at the hearing.

Four Billion Dollars, Five Months

Commonwealth Bank set the scandal in motion in February, when it self-reported suspected fraud to police. At the time, the exposure was estimated at up to $1 billion in home loans, or roughly US$695 million.

By July, the estimate had grown four-fold. Banks and regulators now put the figure at closer to $4 billion across the five biggest lenders, with all ten of the country’s largest banks auditing their books.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) moved to size the problem in March, issuing formal notices to ten lenders, Commonwealth Bank, Westpac, ANZ, National Australia Bank (NAB), Macquarie, HSBC, Suncorp, Bank of Queensland and Bendigo and Adelaide Bank, seeking loan data. AUSTRAC chief executive Brendan Thomas later described how the picture widened once other lenders checked their books against CBA’s findings, sharing intelligence through the regulator’s Fintel Alliance: tested against nine of the other largest lenders, the same pattern pointed to a wider exposure across the market.

NAB confirmed in June it had taken direct action against multiple parties involved in mortgage fraud, referring cases to authorities and exiting or suspending individuals and entities from the bank.

The Syndicate That Beat the System From Inside

Police call it the Penthouse Syndicate, named for the Barangaroo apartment where its alleged ringleader, Bing “Michael” Li, was arrested. NSW Police allege the group defrauded Australia’s major banks of more than $250 million, and the NSW Crime Commission has restrained about $95 million in assets linked to alleged members, including properties, cash, vehicles and luxury goods.

What set the case apart was not clever forgery. Investigators describe deliberate recruitment: a professional inside each stage of a property deal, each adding a layer of insider knowledge the last one could not provide.

Former NAB senior business banking manager Timotius “Donny” Sungkar was charged in November 2025 over roughly $10 million in fraudulent business loans, allegedly fast-tracked through shell companies. The following month, Andrew W. Hu, a former NAB and CBA employee who had become a mortgage broker, was charged over helping the syndicate secure close to $100 million in fraudulent mortgage and business loans. In April, Sydney solicitor Elic Tang became the first legal professional charged in the case, accused of facilitating more than $25 million in fraudulent property transactions through his firm, Rosemont Partners.

The pattern repeated in May, when financial crimes squad detectives arrested a Wentworth Point couple. Huy Tin Nguyen, a former NAB and CBA employee, faces 19 counts of dishonestly obtaining a financial benefit by deception, covering an estimated $31 million in fraudulent mortgages and business loans. Police allege he drew on his knowledge of the banks’ internal fraud detection systems after he left them. His wife, Thu Huong Nguyen, a licensed broker operating through her own firm, was charged with three counts over her role arranging syndicate loans, including a near $13 million purchase of half a Dover Heights duplex.

These corrupt insiders undermine the integrity of Australia’s lending system, and without their involvement, fraud on this scale simply wouldn’t be possible.

Detective Superintendent Gordon Arbinja, commander of the NSW Police Financial Crimes Squad, said that in a statement after the arrests.

Twenty-five people or more now face charges under the investigation, and detectives have said the focus has shifted from frontline participants toward the professionals who let them operate.

Can Brokers Make This Fix Work?

More than three-quarters of Australia’s home lending flows through mortgage brokers, so Senator Andrew Bragg, who chaired the hearing, said any fraud fix will only work if brokers embrace it. That is a tall order for a channel where some of the most damaging fraud cases originated with former bank staff turned brokers.

The industry has already started acting on that risk. Aggregator Finsure terminated its sub-aggregation agreement with Hai Money in late April, after lenders including NAB and CBA raised red flags about potential broker misconduct.

Some in the industry argue the fix has to start with people, not paperwork. Christa Malkin of AFG, a mortgage aggregator, has made the point that technology can flag doctored documents but will not fix a system where fraud can hide inside legitimate-looking channels. Better induction of new brokers, especially former bank staff moving into broking, has separately been raised as an overlooked defence against exactly this kind of insider risk.

• Banks: ABA chief executive Simon Birmingham says paper-based verification is outdated, and direct ATO data access would close off the easiest fraud vector quickly and cheaply.
• Aggregators: AFG’s Christa Malkin argues technology can catch doctored paperwork but will not stop fraud that hides inside otherwise legitimate broking and banking channels.
• Police: Financial Crimes Squad commander Gordon Arbinja says corrupt professional insiders, not clever forgeries, are what make fraud at this scale possible.

What Canberra Still Has to Change

Westpac and NAB executives told the committee take-up of the CDR has been slow, and that the real bottleneck sits at verification, not at the lending decision itself. The ATO says it is working with Treasury and the banks on the idea but remains constrained by secrecy provisions written into the law.

The corporate regulator has been sounding its own alarm. Australian Securities and Investments Commission (ASIC) commissioner Simone Constant issued an open letter to financial services licensees on May 8, warning that AI is reshaping the fraud threat. “This is not a distant or hypothetical risk,” she wrote.

For now, the law banks want changed remains exactly as it was before Monday’s hearing. The Taxation Administration Act has not been amended, and the CDR pipe banks want to use for tax data still carries none of it.

Frequently Asked Questions

What is the Consumer Data Right, and how would it help with mortgage fraud?

The Consumer Data Right (CDR) is Australia’s open banking framework, live since July 2020, that lets customers direct accredited providers to share their banking data securely. Banks want it expanded to carry ATO data too, so a lender could confirm an applicant’s declared income directly with the tax office instead of relying on submitted payslips and statements.

How many people have been charged in the Penthouse Syndicate investigation?

NSW Police’s Strike Force Myddleton, established in January 2024, has charged more than 25 alleged members of the syndicate, ranging from bank employees and mortgage brokers to a solicitor, as the investigation shifts toward professional facilitators rather than frontline participants.

Why is it called the Penthouse Syndicate?

Police gave the group its name after alleged ringleader Bing “Michael” Li was arrested inside a penthouse apartment in Crown’s residential tower at Sydney’s Barangaroo.

What is the Fintel Alliance?

The Fintel Alliance is an AUSTRAC-led working group that lets banks share intelligence with each other, regulators and law enforcement in real time. It was the channel CBA used to share its initial fraud findings, which is how the investigation grew to include nine other major lenders.