AUSTRAC warns financial companies on disaster payment fraud

A 15-page financial crime guide has been published by Services Australia and AUSTRAC, under the latter’s initiative Fintel Alliance, as a means to raise awareness about emergency and disaster payment fraud. 

The collaborative report, titled “Preventing The Exploitation Of Emergency & Disaster Support Payments”, has aimed to help the financial services sector detect and report suspicious transactions related to potential fraud and the misuse of taxpayer funds.

Services Australia had delivered $230.1 billion in social support payments during 2020-21, including around $21.5 billion in disaster payments to people directly impacted by COVID-19, bushfires, floods and cyclones. 

The majority of people claiming disaster assistance were said to be in genuine need, but a small number of individuals and groups have been suspected or caught attempting to access payments they were not entitled to, by committing fraud.

The report noted three specific examples of fraud used: qualification misrepresentation – such as supplying false statements or images to pass eligibility criteria;  organised cluster fraud – where a group of individuals, typically with a central facilitator, will coordinate their disaster claims; and identity fraud – where a third party will impersonate a disaster or emergency victim to secure their financial assistance. 

Of these fraud methods, the report listed a range of indicators for the financial services sector to watch out for, in order to spot suspicious activity, as well as a range of resources for reporting shifty behaviour.

Services Australia general manager Hank Jongen stated: “We take fraud very seriously and thoroughly investigate all suspicious claim activity.

“Taking advantage of payments that help people get back on their feet during a disaster is a particularly low act.”

AUSTRAC chief executive Nicole Rose added: “The misuse of taxpayer funds denies people in genuine need access to money to meet their most basic needs such as food, shelter and other necessities.”

The report has come at a time of growing awareness of the attention that the financial sector is receiving from fraudulent and criminal activity. 

Last month, 350 government, private and community organisations worked collaboratively with Australian Competition and Consumer Commission’s (ACCC) Scamwatch to raise awareness over scam and cyber-criminal activity. 

In September, the Australian Banking Association released a scam awareness campaign following reports that suggested more than a third of Australians knew someone who had lost more than $150,000 from a scam. 

In August, the Office of the Australian Information Commissioner’s Notifiable Data Breaches Report cited more than half of the data breaches in the financial sector were considered to be malicious or criminal related.

But despite the growing awareness, further data has raised concerns over whether the sector is prepared. 

A report from the Australian Securities & Investments Commission (ASIC) earlier this month, noted that Australian firms are struggling to become cyber resilient, having reached less than one-tenth of the intended growth target made in 2019. 

[Related: Australian financial market falls short in cyber security]