Fraudsters are setting up 250 fake self-managed superannuation funds each year, a number that is rising quickly, in order to steal the retirement savings of unsuspecting mum and dad investors.
The Australian Taxation Office has said it is witnessing an increase in SMSF identity fraud where crooks use tax professionals to register phony funds to win massive windfalls.
An ATO spokeswoman said: “While the overall incidence of fraud remains low, we have identified a significant increase in the number of attempted fraudulent SMSF registrations where the victims had their identity stolen due to scams and cyberattacks in 2020-21 as compared to 2019-20.
“They set up the fraudulent funds to access and steal their victims’ superannuation. The perpetrators believe using registered tax agents and other super professionals to register these fake funds will help them avoid detection.”
Sophisticated criminals conduct the scam by phoning and emailing unsuspecting victims, pretending to be financial advisers or experts in superannuation, and encouraging them to transfer their savings from a fund regulated by the Australian Prudential Regulation Authority to a purportedly high-perfoming SMSF.
The scammers will prompt victims to do a bogus superannuation comparison, often borrowing the name and Australian financial services licence of real businesses, and setting up fake websites to appear legitimate.
“They will tell you there is no need for you to engage directly with the ATO, ASIC or any other tax or super professional,” the ATO said.
“If you agree to invest, they will transfer your super into bank accounts they control and disappear with it.
“Even if you don’t agree to invest, if you provide them with enough personal information, they may use this to transfer your super from your existing account without you knowing, ultimately stealing your super savings.”
There has been a global rise in sophisticated investment scams since the onset of the COVID-19 pandemic. Last year, Britain’s Financial Conduct Authority sounded the klaxon on the “attack of the clone firms”, companies hijacking the real-world identities of major institutions and individual bankers. It said more than £78 million ($145 million) had been stolen in 2020 by scammers impersonating big financial institutions.
Last week, the International Organisation of Securities Commissions highlighted how “the current market environment may have created a fertile ground for fraudulent or scam activity”.
Meanwhile, the Australian Securities and Investments Commission published a separate report last week into so-called finfluencers who have taken to social media to provide financial advice, tout trades and, in some instances, promote investments.
The dramatic increase in retail share trading – which more than doubled to over 20 per cent of volume in the US – and events such as the GameStop short squeeze have required regulators to probe the phenomenon and consider new approaches.
An ATO spokeswoman said people who registered new SMSFs or changed banking details would generally be alerted by SMS or email.
“We are committed to … ensuring this type of activity is addressed and serious consequences apply to the perpetrators,” she said.
