Extra ID checks expected to delay SMSF rollovers
With APRA encouraging super funds to undertake additional proof of identity checks after the Optus data breach, there may be delays with rollovers to SMSFs, says the ATO.
Speaking at a recent conference in Sydney, assistant commissioner, SMSF Risk and Strategy, Justin Micale stated that while the recent Optus data breach would not provide fraudsters with direct access to tax or super records, government agencies and SMSF professionals do need to be extra vigilant.
“We are working across government agencies to identify and mitigate risks and have put safeguards in place to protect those impacted,” Mr Micale told delegates at the CA ANZ National SMSF and Financial Advice Conference last week.
“For instance, APRA has also encouraged the funds it regulates to undertake additional proof of identity checks prior to rolling money over into an SMSF.”
Mr Micale advised SMSF professionals that this additional control may delay the processing of these rollover requests.
While ID fraud and investment scams are still rare in the SMSF sector, Mr Micale warned that they are becoming increasingly prevalent.
“In the 2022 financial year, we identified increasing numbers of individuals that were victims of identity fraud where SMSFs were registered without their knowledge or consent. Luckily, for most victims we detected the fraud early so we could protect their super, but not for all,” he cautioned.
Mr Micale said the other type of fraud occurring was where scammers had contacted individuals and coerced them into providing personal information, setting up an SMSF and investing in bogus products.
“These scammers are becoming increasingly sophisticated impersonating well-known Australian companies and using personal details to gain trust.
They use various methods to contact people such as email or cold calling, pretending to be financial advisers and encouraging them to transfer their superannuation into a new SMSF or investment product,” he said.
“The investor is often promised high returns. Once they have their personal information, they seek to use it to establish an SMSF, rollover money into the fund and steal their retirement savings.”
These types of scams, he said, reinforce the need for individuals and SMSF professionals to treat contact from any third parties in relation to their investment and superannuation choices with caution.
In order to help prevent fraud and scams, Mr Micale said the ATO will issue alerts whenever when a new SMSF is set up or a member is added to an existing SMSF.
“We also send an alert when the SMSF’s bank account, electronic service address or authorised contacts for the fund are changed,” said Mr Micale.
“If your clients receive an ATO SMSF alert and are not aware of any activity, make sure they act quickly and contact us so we can stop the fund registration or the change of details from proceeding.”
He also warned SMSF professionals to ensure they verify the identity of a new client where they’re asked to register an SMSF as some tax agents have been unwittingly caught up in registering fraudulent funds.
“Strong client verification helps to protect tax practitioners and their clients from identity fraud,” he said.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
