Bank customers are increasingly turning to generative AI tools to generate forged payslips and proof of income for business and mortgage loan applications.
According to CEO of the Australian Banking Association and former Finance Minister Simon Birmingham, the wave of dodgy loan applications is a major issue for the banking sector, and its only getting worse.
"Artificial intelligence is making fake payslips and doctored statements frighteningly easy to produce," he said at a Senate committee hearing into Australian productivity levels this week.
Birmingham and the Big Four banks are now requesting access to ATO income data so that they can verify income details themselves.
"The single best defence against fake income documents is real income data – and the ATO already holds it,” Birmingham added.
Speaking with Yahoo Finance, Birmingham elaborated on his argument for ATO data.
"A single, authoritative source of income data is the most effective way to address the risk of fraudulent loan applications," he said.
"Secure, consent-based access to ATO-held income information would give lenders a robust central point of truth, materially improving the integrity of lending decisions."
The change is not as simple as getting ATO permission however. The government would need to amend the Taxation Administration Act. The recent budget allocated millions to build the infrastructure for investigating “open banking” reforms, which would allow for that data sharing to occur.
The banks want this change made sooner, as large numbers of dodgy loans have been discovered. Reports last month revealed that there might be around $4 billion in fraudulent mortgage loans that have been used to buy homes in Australia.
Birmingham told Yahoo Finance that the budget and exploration by the government is welcome, but it needs to be done quickly.
"Banks welcome the government commitment to explore granting access and recognise there are important considerations required but hope these processes can progress as quickly as possible," he said.
"Secure access to ATO data isn't just a fraud prevention measure but a productivity measure than can make loan applications simpler for consumers and give them faster, more accurate approvals processes."
Currently, the government is reportedly working on a register of dodgy or fraudulent mortgage brokers who have done deals linked to illegal activity, according to an AFR report from last month.
The government also launched new compliance rules for real estate sector workers that required verification of funds to be stricter.
"Both the extension of anti-money laundering obligations and access to ATO income verification can make a meaningful difference to reduce loan fraud and criminal activity," added Birmingham.
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