The main threat to the non-bank lending and finance industry is fraud, particularly loan application fraud, identity fraud and welfare fraud.
AUSTRAC has published a Money Laundering and Terrorist Financing Risk Assessment for the Non-Bank Lending and Financing Industry.
The risk assessment reveals that the non-bank lending and financing sector has an average level of vulnerability to financial crime, with the overall risk of money laundering and terrorist financing being rated as medium.
The main threat to the industry is fraud, including loan application fraud, identity fraud and welfare fraud.
Fraud in loan applications was found to be often associated with identity fraud as the person seeking financing used someone else’s identity to avoid having to make repayments. , or presented false or misleading information about itself to increase its chances of obtaining financing.
A welfare fraud has been identified when the information provided on a loan application has been found to be incompatible with a Centrelink income statement, when the transactions have been found to be incompatible with the expected profile of a client receiving services from Centrelink or when Centrelink beneficiaries received employment income this was probably not reported.
Lower levels of other predicate offenses, such as personal and corporate tax evasion, were also noted.
Lenders and non-bank financiers are also a target for money laundering, mainly linked to unexpected prepayments of loans using the proceeds of crime. This methodology allows criminals to convert the proceeds of crime into high-value assets such as real estate and luxury vehicles.
The non-bank lending and finance industry also suspected that in some cases companies were using the proceeds of crime to repay their loans, essentially buying the asset with illicit funds.
In producing the report, AUSTRAC analyzed reports of suspicious transactions and cases by the industry between February 2018 and January 2019. It also worked with a number of stakeholders, associations and industry experts. , and partner agencies to collect intelligence and insight on threats, vulnerabilities and consequences. sector specific.
AUSTRAC expects the non-bank lending and finance industry to use this risk assessment to protect their businesses and the Australian community from criminal threats.
The risk assessment is published here.
The next Australian banking sector-focused risk assessments are expected to be released in the coming months.