Licensees warned of share sale fraud risks

ASIC said it identified a rise in the instance of share sale fraud, primarily in connection with issuer-sponsored holdings.

In response, it provided guidance in Information Sheet 237 (INFO 237) to AFS licensees that may be vulnerable to share sale fraud.

INFO 237 provides guidance in relation to ASIC’s expectations around licensees’ management of one-off share sales, customer due diligence, ongoing customer due diligence, intermediary clients, anti-money laundering and counter-terrorism financing (AML/CTF) training, and reporting of suspicious matters.

ASIC said it considers that robust account opening and customer due diligence practices can be effective in preventing fraudulent activity such as share sale fraud.

“As share sale fraud involves identity theft, we strongly encourage AFS licensees to continually monitor the adequacy of their client onboarding and customer due diligence practices,” it said.

“AFS licensees should regularly review or spot check new accounts – these checks should preferably be conducted by someone not involved in the day-to-day client onboarding process.

“AFS licensees should also consider implementing client call-backs (to conduct due diligence) as part of the onboarding process.”

Share sale fraud refers to the fraudulent activity of a person who is not who they claim to be, selling shares that do not belong to them.

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].