Australian Superannuation at Risk

With over $2tn of funds available – the fraudsters and hackers are circling

By Dominic Frost

The Australian Superannuation industry is well recognised globally as a success, and the sheer size (Australians have over AUD$2 trillion in superannuation assets as of June 2015) broadcasts to the world the underlying future provisions citizens are setting aside for retirement.

In parallel, the Superannuation market is increasingly competitive and Australians have the ability to choose and change Superannuation providers quickly and easily. This has driven more choice and ultimately has improved the overall industry for customers.

In the digital age, customers are asking for better access to their accounts and information, and the ability to transact online. While Superannuation will never be a transactional account, there are moves in the industry to adopt more automated and straight-through processing in the near and mid-term future.

However, this flexibility and openness comes at a price. And that price is risk.

Fraudsters are looking at the “prize” for Superannuation – the average male balance is just over $100,000 – and it’s a big prize. It is worth them investing time and effort in it!

They simply cannot ignore it.

Currently it is difficult to get money out of Superannuation, Life and TPD (Total and Permanent Disability) products. There is a lot of paperwork and processes to complete. However this is changing.

The biggest risks to Superannuation come from:

• Online Fraud – takeover of accounts and then falsification of an “exit” or “payment” event (e.g. a payout or transfer to another compromised account).
• Insider Fraud – assistance from employees to by-pass processes and checks to extract or re-direct funds.
• Informed 3rd Party Fraud – a relative, broker or advisor who knows enough about the account holder to pose as the account holder through interaction channels (telephone, email etc.) as a way of identity theft

While internal processes and procedures can protect, they can still be circumvented. Audits and investigation only spot the issue once the money has gone.

However, in just about all high profile cases of Superannuation fraud, there were significant early warning signals – employees accessing dormant accounts followed by a transfer or failed logins to online accounts then changes an electronic payment to a postal cheque.

The early warning signals are there as long as you are checking for them.

The good news is the combination of big data, predictive behavioural analytics and machine learning can provide anti-fraud protection for Superannuation providers and their customers.

With the Superannuation industry evolving and embracing both digital channels and straight-through-processing – the risk profile has increased, so protection needs to as well. It won’t be long before the more progressive organisations advertise their fraud detection and fraud prevention capabilities – just like the banks and card providers.

SAS Australia and New Zealand has a specialist team to advise and protect organisations on the risk of fraud and financial crime – with detailed knowledge of the risk to Super providers and administrators.

Author Bio: Dominic Frost works for SAS in Australia who have a specialist team dedicated to fraud and financial crime prevention and detection.