Australian regulators are warning about a rise in identity theft that’s being used to drain investors’ brokerage accounts.
Following an industry review, which was sparked by a “spike” in reports of investors’ shares being stolen, the Australian Securities and Investments Commission (ASIC) issued a warning to investors and the investment industry, along with new guidance to the industry on guarding against these kinds of schemes.
According to the regulator, so-called “share-sale frauds” typically involve an investor’s brokerage account being compromised and their portfolio being liquidated with the proceeds directed to the scammer’s bank account, or the creation of a new trading account using stolen or fraudulent identity documents, which are used to sell an investor’s shares.
“In the last four years, ASIC analysis has identified a seven-fold increase in the number of share-sale fraud reports made by market intermediaries,” said Simone Constant, ASIC commissioner, in a release.
“[I]n some cases entire investment portfolios are lost, and millions of dollars are involved. There is a tremendous emotional and financial impact for investors who fall victim,” she noted.
In response to the rise in these kinds of attacks, the ASIC reviewed the industry’s client onboarding and identity verification practices, and their fraud detection practices. It issued revised guidance that aims to help the brokerage industry strengthen its practices for detecting, preventing and remediating share-sale frauds.
Along with increased monitoring and due diligence by industry firms to guard against these sorts of schemes, the ASIC also called for investors to be alert for suspicious transaction activity, and to practice strong account security.
“Vigilance is key as share-sale fraud is often difficult to detect,” Constant said.