Under Super Early Release (SERS), the ATO approves the release of money from superannuation accounts. However, funds will be responsible for executing benefit payment requests. Payments will follow the established process for early release on compassionate grounds.
A key distinction to the current process is that SERS involves payments on a far greater scale (466,000 ATO approvals to date), a fast turn-around-time and reduced scrutiny of the reason for the payment.
While this process will no doubt assist many thousands of Australians suffering financial hardship, it unfortunately also increases the risk of fraud.
AUSTRAC is the government body that monitors suspicious financial transactions. In response to the coronavirus pandemic, AUSTRAC has made a rule under the Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF) to ensure that superannuation funds making ATO-approved payments don’t have to conduct additional customer verification under the AML/CTF regime.
This serves the purpose of speeding up the process for super funds, however it also creates additional opportunity for fraud to be successfully perpetrated in the form of unauthorised ATO approvals being issued. Responsibility remains with super funds to satisfy themselves that they are dealing with a bona fide application, whilst balancing the pressures to complete payment of monies to people in need.
This isn’t an academic or theoretical concern. Funds and government agencies have already detected attempts to defraud people of their super. An example of this is the ACCC has stated that scammers are cold-calling people claiming to be from organisations that can assist members to obtain early access to their superannuation account.
The super industry and the ATO must work closely together to ensure that fraud monitoring and detection systems continue to work well, safe-guarding member’s super. In particular, vulnerable Australians seeking to access their super are acutely at risk.
The protection in place includes funds having to notify AUSTRAC and the ATO of suspicious activity. For example, there may be some questionable bank accounts that are used multiple times. A process must be put in place across whole of the industry and government bodies, that identifies and “red-flags” these types of bank accounts. This action must be implemented asap to enable a quick response and provide the necessary protection of members’ money.
If you would like more information, please contact IQ Group at: email@example.com.
Senior Consultant Fraud and Regulatory Compliance – IQ Group