The 5 fraud & finance crime risks property fund managers should be discussing in 2026

Property fund managers operate in an increasingly complex environment. Alongside market pressures, rising investor expectations, and regulatory change, fraud risks are evolving in both sophistication and impact. While many fund managers have established control frameworks, recent developments suggest that traditional fraud risk assessments may no longer be sufficient on their own.

From financial crime and cyber-enabled scams through to procurement misconduct and valuation integrity, Boards and Audit & Risk Committees are placing greater scrutiny on how fraud risks are identified, managed, and monitored across their organisations.

Below are five fraud risks that property fund managers should be discussing as part of their governance and risk management agenda.

1. Financial crime risk is moving from compliance to governance

Australia’s evolving threat and fraud risk environment means that property funds management businesses are attractive targets for the movement and concealment of illicit funds, with increasing regulatory focus on how organisations identify and manage those risks.

For property fund managers, the challenge extends well beyond ongoing compliance obligations. Investor onboarding processes, beneficial ownership assessments, source of funds verification, and ongoing transaction monitoring are all becoming critical components of a broader financial crime risk framework.

At the same time, Boards are increasingly asking whether existing governance structures provide sufficient oversight of emerging financial crime risks and whether internal controls remain fit for purpose in a changing regulatory environment.

As regulatory expectations continue to evolve, financial crime risk is rapidly becoming a governance issue requiring coordinated input from compliance, risk, internal audit, and forensic specialists.

2. Procurement & development fraud

Funds involved in property development, capital works programs, or significant asset refurbishment projects face heightened fraud risks due to the volume and complexity of third-party expenditure.

These risks are often difficult to detect through traditional financial controls alone, particularly where relationships with contractors, project managers, and consultants have developed over many years.

Given the significant financial investment associated with development projects, even isolated incidents can result in material losses and reputational damage.

3. Valuation & performance reporting integrity

Property valuations sit at the heart of fund performance, investor reporting, and decision-making. In volatile markets, pressure can emerge to demonstrate stable performance, maintain distributions, or support fundraising activities.

Boards should ensure that valuation governance frameworks provide sufficient independence, transparency, and challenge, particularly where valuation outcomes have a direct impact on investor returns and fund performance metrics.

Strong governance over valuation processes is not simply an accounting issue, it is fundamental to maintaining investor confidence.

4. Cyber-enabled payment & identity fraud

Fraudsters are increasingly leveraging technology to target organisations involved in high-value transactions.

The challenge for property fund managers is that many of these attacks exploit trusted relationships rather than technical vulnerabilities.

A payment request that appears to come from a known supplier, executive, or investor can bypass controls where verification processes are inadequate.

Organisations should regularly review their payment approval frameworks, vendor management processes, and employee awareness programs to ensure controls evolve alongside emerging threats.

5. Conflicts of interest & related-party transactions

Many significant investigations do not begin with the discovery of a financial irregularity. Instead, they start with concerns raised by employees, investors, or whistleblowers about decision-making transparency.

In many cases, the issue is not the existence of a conflict itself, but rather whether it has been appropriately identified, disclosed, and managed.

Effective governance requires clear policies, transparent reporting, and a culture where potential conflicts are proactively raised rather than retrospectively explained.

Looking ahead

The fraud risks facing property fund managers today are broader than they were even five years ago. Financial crime obligations are expanding, cyber-enabled fraud is becoming increasingly sophisticated, and stakeholder expectations around governance continue to rise.

While each organisation’s risk profile will differ, the common theme is clear: fraud risk management is no longer just an operational responsibility but a strategic issue that requires ongoing oversight from Boards, executives, and Audit & Risk Committees alike.

Organisations that take a proactive approach to identifying emerging risks, assessing the effectiveness of controls, and building a strong governance culture will be better positioned to protect investor value and maintain stakeholder trust.

How SW can help

SW can assist property fund managers in identifying, assessing, and responding to evolving fraud and financial crime risks through a combination of forensic expertise, risk advisory, and internal audit capabilities.

Our specialists can help organisations strengthen their fraud risk frameworks, assess the effectiveness of existing controls, support governance and risk reporting, and provide independent insight into emerging threats.

By taking a proactive approach to fraud risk management, organisations can strengthen governance and build resilience in an increasingly complex operating environment.

To discuss how SW can support your organisation in managing fraud and financial crime risks, please reach out to your SW advisor.