Stolen identities and fake SMSFs.

The scale, as the ATO sees it

The ATO says identity fraud and investment scams are a top priority in the SMSF sector, because the impact can be devastating with some victims losing all of their retirement savings. It also says the risk of fraud is only growing, pointing to global threats, organised crime, the use of artificial intelligence and increased data breaches.

The same speech notes the problem is not common in the sector. That is no comfort to the people affected, and an auditor may be the first professional to see the fund.

How a fake SMSF is built

The ATO describes cases where SMSFs were registered without the member’s knowledge and super was rolled into an account controlled by the fraudster. The fund may be new, the member may be elderly or inattentive, and the only person who gains is the fraudster.

Our advice: unexpected facts on a first-year audit are worth noticing. A member who has never seen the fund’s bank statements, a trustee whose email address changed recently, or a fund whose only activity is a rollover in and a payment out.

The safeguards that exist

The ATO sends an alert when a rollover is requested, and when a change of details is requested, such as adding a new member to an SMSF or changing the SMSF bank account details. APRA has encouraged the funds it regulates to undertake additional proof of identity checks before rolling money over into an SMSF.

Tax professionals asked to register an SMSF for a new client are told to verify their identity, because some tax agents were unwittingly caught up in registering fraudulent funds. If you work in a firm that also registers funds, that applies to your colleagues too.

What to do when it has happened

If someone used personal information to set up an SMSF under your name, the ATO says to phone it on 1800 467 033, between 8 am and 6 pm AEST, Monday to Friday. It also says you must report all tax-related security issues to it, and that anyone holding tax or superannuation data for clients who suspects a breach should phone its Client Identity Support Centre.

Our advice: write the date and time you noticed the problem, what you saw, who you spoke to and what they said. If the client is the member, help them make the call and keep copies of what they send.

Scenario: the member who never signed anything

You contact the sole member of a small fund, Imogen, to ask for her signed representation letter. She says she has never heard of the fund. The fund was registered five months ago, its bank account was opened a week later and a rollover arrived soon after.

Do not argue and do not sign the audit. Ask Imogen to phone the ATO on the number above at once, and to contact her previous super fund. Write down what she tells you. Stop work on the audit and talk to your firm’s principal about what must be reported and to whom.

Red flags: a member who does not know the fund, a bank account opened shortly after registration, a rollover as the only activity, and contact details that do not match the member.