Cyber criminals use self-managed super as ‘getaway vehicle’, as illegal access rises

Criminals are targeting the $1 trillion SMSF sector as they try to steal Australians’ retirement savings, regulators say.

Cyber criminals are using the $1 trillion self-managed super sector as a “getaway vehicle” to take off with Australians’ nest eggs, as regulators go after dodgy superannuation promoters.

The Australian Taxation Office and Australian Securities & Investments Commission have noted rises in illegal early access from super, cyber attacks, prohibited loans from self-managed super funds and questionable attempts to get super on compassionate grounds.

ATO deputy commissioner Ben Kelly said the regulator was concerned about SMSFs being used by criminals stealing people’s superannuation.

“Probably the thing that we’re more concerned about is where the SMSF’s the getaway vehicle,” Mr Kelly told the SMSF Association National Conference in Adelaide.

“This is probably more in the APRA-regulated fund member space where cyber criminals are basically committing identity fraud and then set up an SMSF, roll over the money, and then get away with the money.

“For SMSF members, the general advice you have around your own cyber security applies equally when it comes to your fund.”

ASIC and the ATO are working together to target illegal early access to super, and Mr Kelly said there was also a focus on educating Australians about SMSF rulesand consequences.

He said that as of July last year, more than $1 trillion was sitting in SMSFs, “nearly a quarter of the assets held in Australia’s superannuation system”.

The latest ATO data, from the 2022-23 financial year, shows while illegal early access rose slightly over 12 months to $252m, prohibited loans to SMSF members surged from $231m to $398m.

“Our analysis indicates that most cases of illegal early access and prohibited loans involve newly established funds that never intended to operate as genuine superannuation funds,” Mr Kelly said.

“Instead, they were set up as conduits for short-term finance, often facilitated by promoters who target vulnerable individuals and charge exorbitant fees.

“We also know that SMSFs with balances below $200,000 are the most likely to engage in illegal early access, with just over 80 per cent of all cases coming from this group.”

ASIC senior executive leader, financial advice, Leah Sciacca said ASIC and the ATO were conducting “joint regulatory engagements” including investigating suspected promoters of these illegal schemes.

“Individuals who access their retirement savings before a condition of release has been met not only impact their own retirement outcome but also impact the integrity of the system,” she said.

ATO statistics also show a surge in people accessing their superannuation on compassionate grounds, such as for medical treatment, disability, palliative care, funeral expenses and preventing a forced sale of a home.

Applications for compassionate release doubled between 2021-22 and 2024-25, to 112,400, but only 60 per cent were approved last financial year.

Mr Kelly said while most requests were genuine, “some of the things we are seeing with dental are indicating that super is the way you can get a new set of teeth … I think that should just raise some flags for people”.

“The conditions are clear – you’ve got to be in acute or chronic pain, you’ve got to have acute or chronic mental disturbance, or it must be a life-threatening illness or injury, and everyone needs to be really clear about that.”

Ms Sciacca said ASIC was conducting “a range of surveillance activities” and this week announced a new review of businesses involved in lead generation for financial advisers.

She said ASIC was continuing investigations into individuals and entities connected to the Shield Master Fund and First Guardian Master Fund collapses.

“That includes the lead generators, the financial advisers and financial firms that authorised them, the superannuation trustees that made Shield and First Guardian available via the platforms, the auditors and the operators of the managed investment schemes.

“In these matters, around 11,000 people invested their money, including their superannuation retirement savings, into First Guardian or Shield.”

Ms Sciacca said cybercrime was another key focus for ASIC.

“We are seeing more in AI impersonation scams,” she said.

“It’s evolving all of the time and the risk environment is shifting pretty quickly. You have to be vigilant and taking all precautions that you can.”