ID fraud impacting SMSFs

identity fraud SMSFs

Identity and investment fraud are on the rise among SMSFs and the ATO has acknowledged this development and has a strategy to combat it.

The ATO has revealed identity fraud is increasingly working its way into the SMSF sector and it is implementing a system to combat this type of criminal behaviour.

“This is a really important issue for us because identity fraud, as you all know, is becoming far more prevalent across Australia and the SMSF sector is not immune,” ATO SMSF risk and strategy assistant commissioner Justin Micale said.

“In the 2021 financial year we identified increasing numbers of individuals that were victims of identity fraud where SMSFs were registered [in people’s names] without the individuals’ knowledge or consent.

“Fortunately for most of those victims we detected those frauds early so we could protect their super, but not for all.”

To combat the rise of identity fraud and other investment scams, the regulator has deployed a strategy of issuing alerts to SMSF trustees regarding significant changes to their funds.

“When an SMSF is set up or a member is added to an existing SMSF, the ATO sends an alert via a text message or email [to the relevant individuals]. We also send an alert when an SMSF’s bank account or electronic service address or authorised contact for the fund has changed,” Micale noted.

“The alerts prompt the individual to get in touch with us if they’re unaware of these changes so that we can stop the fund registration or change of details proceeding.

“Importantly, if your clients receive an SMSF alert and they’re not aware of any [fund] activity, make sure they act quickly and contact us.”

As such, he pointed out it is more important than ever for accountants and advisers to ensure the contact details registered with the ATO for their clients, in terms of mobile phone numbers and email addresses, are up to date.

He recommended practitioners issue their clients with a key message with these illegal behaviours in mind.

“[Tell them to] be aware of who they provide their identity and superannuation details to, particularly where they are only engaging with these people online. It’s also important to remind them to check they are dealing with a licensed financial adviser. They can do this by searching their details on the Moneysmart financial adviser register,” he suggested.

The Australian Securities and Investments Commission recently issued a warning about illegal social media investment strategies.


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