The ultimate odd couple: the tax office and your bank, quietly comparing notes on your finances. But with AI making it easier than ever to fake a payslip, that unlikely partnership might be exactly what stops the next wave of loan fraud.
History gives us many examples of unholy alliances, like the countries that thought getting together to declare war on the world in the 1939–45 era is a case in point. But when it comes to less geopolitical pairing up, many Australians would have to have reservations about the Australian Tax Office and our banks considering bedding down together.
Unfortunately, this really worrying proposition could be for a good cause, as the incidents of fraudulent loan applications grow higher by the day thanks to the work of AI agents such as Anthropic’s Claude and his rivals like Microsoft’s Copilot and Salesforce’s Einstein!
The AFR’s James Eyres reports that the incidence of dodgy borrowers rearranging reality to get a loan “will get worse unless they can securely access tax data to verify a borrower’s income instead of relying on documents that can be easily faked using artificial intelligence.”
That newspaper told us in February that both the CBA and NAB had been investigating the rise of false documentation aided and abetted by the professionalism that these AI agents can bring to the loan application table.
Eyres says there is a network of accountants, real estate agents, mortgage brokers and even bankers who are teaming up using AI, and apart from conspiring to secure loans, there is also an intention, in some cases, “to evade China’s capital controls” over their population!
Bankers told a Senate committee on Monday that the Budget’s allocation of funds to assess the good sense of the ATO sharing tax data with banks was a good idea.
The bankers made the following arguments to make the alliance between them and the ATO:
- AI is helping loan applicants cheat the loan application system.
- Many key documents, such as payslips, tax returns and bank statements are presented by hand or as PDFs via email, which are easily doctored.
- Banks should be able to check ATO data to verify that the documents are legit.
Former Liberal Senator Simon Birmingham, who is now the CEO of the Australian Banking Association, said the following to the committee: “Fraudulent loan documentation is a growing problem, and artificial intelligence is making fake payslips and doctored statements frighteningly easy to produce.”
The banks think an easy fix to the problem exists using the Consumer Data Right (CDR) service, which as its website explains, helps manage your personal or business finances and is secure and easy. “If you choose to use Consumer Data Right, the automated, secure data transfer is done between the providers. The system is strictly regulated by the Australian Government.”
The banks call this “open banking” but it’s not as open as they would like.
But the problem and the solution are an easy fix and were explained by Westpac’s general manager for retail banking Damien Macrae.
“Six years on, it (CDR) remains a productivity oddity: the government-mandated secure data sharing system, yet government data isn’t shared within it,” Macrae said. “We don’t have a decisioning issue at the moment; we have a verification issue. So, this would reduce time to verify.”
The ATO told the committee that it was looking at the matter with Treasury but no decision either way has been made. Given the AFR reported recently that loan fraud with our top five banks had blown out to $4 billion, this potentially undermines the financial reliability of our banks, which all bank shareholders should really care about.
And given our banks’ pivotal role in funding our economy’s businesses and consumer activities, accessing ATO data to verify someone’s creditworthiness sounds both worrying but necessary.
I’d like to tell banks to “buzz off” when it comes to our tax data, but in the age of AI and the crooks it will enable, we need a watchful ‘big brother’ or minder, who as the old Dennis Waterman song once promised: “I could be so good for you!”
Tightening up on loan fraud is a good thing, it means another card is removed from the House of Cards’ that the Australian property market has become. This market is only headed one way, that’s down.
For decades a blind eye has been turned on the proliferation of inexplicable wealth, manifesting in opulent dwellings and expensive cars owned by people who have no visible means of legitimate income. We have all seen it and so have law enforcement agencies yet it continues unabated. Hopefully things might change for the better as responsible taxpayers are being asked for more and more, including raids on capital that has been saved and tax already paid on it! Wake up Australia!
Is the government getting ready to start taking money out of punters bank accounts to cover the deficit?