- ASIC Guidance
- Share Sale Fraud
- Investor Protection
ASIC updates INFO 237 to help AFS licensees combat a surge in identity theft and share sale fraud, urging greater vigilance and client protection.
ASIC Tightens Guidance to Combat Share Sale Fraud
Amid a worrying rise in share sale fraud cases linked to identity theft, the Australian Securities and Investments Commission (ASIC) has released updated guidance aimed at helping Australian financial services (AFS) licensees safeguard investors. The revised Information Sheet 237, titled Protecting against share sale fraud (INFO 237), reflects findings from an ASIC-led review into the onboarding and verification practices of AFS licensees.
What is Share Sale Fraud?
Share sale fraud occurs when someone impersonates an account holder to sell or transfer shares that do not belong to them. These fraudulent acts can wipe out entire investment portfolios and cause devastating financial and emotional distress to victims. ASIC warns that share sale fraud is on the rise and calls for heightened vigilance among financial service providers and investors alike.
Sevenfold Increase in Fraud Reports
According to ASIC Commissioner Simone Constant, the number of share sale fraud incidents reported by market intermediaries has increased sevenfold in just four years. “There are terrible stories out there, where in some cases entire investment portfolios are lost,” she said. “Share sale fraud can happen to anyone, at any time.”
Key Observations from INFO 237
ASIC’s updated INFO 237 outlines common fraud tactics used by criminals and recommends improved practices for licensees to prevent and detect fraudulent activity. These better practices include:
- Enhanced onboarding verification: Be vigilant when onboarding new clients. Look out for stock images, forged documents, and verify authenticity independently.
- Monitoring trading behaviour: Flag unusual trading activity, large withdrawals, or transactions from newly opened accounts for further scrutiny.
- Additional due diligence on changes: Conduct thorough checks when clients update personal or banking details, ensuring bank accounts match the client’s name.
Role of AFS Licensees in Prevention
ASIC emphasises that AFS licensees play a critical role in preventing share sale fraud. By implementing stronger verification systems and transaction monitoring, licensees can help reduce risk not only for their own clients but for the wider market.
Advice for Investors
Investors, too, have a role to play. ASIC recommends the following protective measures:
- Regularly review your share portfolio and account activity.
- Be alert to unfamiliar or suspicious transactions.
- Use multi-factor authentication on all financial platforms.
- Adopt passphrases instead of traditional passwords for stronger account protection.
Vigilance is the Best Defence
ASIC’s latest guidance is a wake-up call for the entire industry. With share sale fraud growing more complex and harder to detect, prevention and early intervention are essential. Both AFS licensees and investors must stay alert and adopt robust verification practices to safeguard their investments and identities.