Articles

"Property is AUSTRAC's money-laundering blindspot"

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by Duncan Hughes.

A loophole for laundering vast amounts of cash into the nation's property market has been exposed by the Commonwealth Bank of Australia's money laundering scandal, according to security experts.

Stolen identities and illicit bank accounts used in the CBA scam to transfer money out of Australia are also the hallmarks of a sophisticated global network used to launder huge amounts into residential and commercial real estate, they claim.

The CBA action is also revealing regulators deep reliance on banks for intelligence on transfers of large amounts of money between accounts, which can result in cash transactions going unnoticed, they claim.

George Brandis, federal attorney-general, is expected to make an "imminent" announcement about boosting powers and resources of Austrac, the government agency that combats money laundering, according to a department spokesman.

But it is expected to fall short of extending existing laws to cover real estate agents.

"I believe the case for reform is compelling," said Malcolm Shackell, a forensic crime specialist and partner with global consultancy PwC. "Australia is under pressure from international agencies to broaden the scope of its regulations to cover industries outside of financial services, including real estate agents, jewellers, accountants and, potentially, conveyancing lawyers."

The government has to balance tighter controls with rising costs for business, he added.

Malcolm Gunning, president of the Real Estate Institute of Australia, also supports tougher financial scrutiny of buyers but wants it done in conjunction with the Australian Taxation Office and Austrac when property deals are settled.

Proposals to check at the point of sale, such as an auction, would be impractical and difficult to police, he said.

Under existing law, real estate agents and other businesses involved in buying and selling real estate do not need to identify where the money comes from or who is paying.

The law does not require real estate agents, lawyers, accountants or any other person involved in the deal to identify the beneficial owner of the deal. A beneficial owner enjoys the benefits of ownership though title is in another name, such as a company.

The Black Economy Taskforce is warning identity fraud is "systemically undermining" the nation's financial system and is expected to call for a new approach in its pending final report.

The scale of the problem has been highlighted by an alleged perpetrator of the CBA scam using 11 false identities to transfer tens-of-millions of dollars out of Australia, according to court documents.

Security specialists claim large amounts of money can be transferred into fraudulent bank accounts created with stolen identities purchased on the 'DarkWeb', which is like an eBay for criminals.

"Lenders have abrogated their responsibility to know and identify their client," said Geoff Stockton, chief executive of PRM Group, a risk management specialist. "People are taking advantage of being able to open an account, borrow and transfer cash from behind a computer."

Real estate agents report unprecedented numbers of overseas' buyers of residential and commercial property in Melbourne and Sydney paying cash, typically transferring payments from a local account.

Asians were last year the biggest investors in Australia, spending about $47 billion largely on residential and commercial property, according to the Foreign Investment Review Board.

An estimated 70 per cent of Chinese buyers pay in cash, according to Transparency International, an international non-government organisation targeting corruption.

"Cyber criminals selling forged bank statements for $6 on darkweb"

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by Duncan Hughes.

Cyber criminals are selling forged Commonwealth Bank of Australia and Westpac Group credit card, bank and investment statements for between $6 to $24 with the promise of delivery anywhere in the world within 24 hours.

The documents, obtained on the dark web, are a passport into the nation's financial services and banking system, including its lucrative $2 trillion of superannuation assets, the world's fourth largest pool of managed funds.

Stolen identities are used to set up bank accounts for personal loans, mortgages, credit cards, drawing-down a victim's superannuation funds or earning points towards a driving licence, police checks, renting an apartment or identification cards for working in the nation's aviation or maritime industries.

Buyers can get identical replicas of super, bank or credit card statements for editing with the buyer's assumed name, address, statement summary, including deposits and withdrawals. Payments can be made over the web using untraceable 'bitcoin'.

There is also a thriving forged personal identity market – using anything from stolen driver's licences to passports – which the buyer can then use to create a new identity.

"This is absolutely on the increase," said Geoff Stockton , a retired senior Victorian police officer and risk management specialist.

Mr Stockton claims the convenience of anonymously setting up bank and other financial service accounts on the web have made it easier for local and overseas' fraudsters to supply services.

He has set up Personnel Risk Management Group and Pharmacy ID to advise private companies and public service on verification of identity.

The dark web is an infamous source of state-of-the-art illegal weapons, illicit drugs and as a means for transferring money to unlawful organisations, including outlawed terrorist groups.

Other big four bank financial documents are also obtainable using the same dark web, which is a network of websites that cannot be found by traditional search engines.

The Australian Financial Review located documents on notorious AlphaBay Market, which has since been closed by US authorities.

But within days replacement sites were offering the same range of illegal services.

Documents obtained by the Financial Review include forged Commonwealth Bank of Australia statements for about $6 with a guaranteed delivery within one day.

CBA is the nation's biggest mortgage and credit card provider.

An editable template for a Colonial First State bank statement can be purchased for $24, also payable in US dollars and delivered worldwide within a day. A template is a facsimile blank statement that can be completed by the buyer.

Colonial First State is a fund management group and superannuation specialist with more than $113 billion under management. It is also a major player in the nation's superannuation sector.

Risk management consultants are working with major superannuation funds to combat the growing risk of asset theft by using stolen identities.

Lenders are struggling to keep up with changing technologies and the need to balance improving customer online experience with fraud prevention, according to security experts.

But many transactions are being verified by Victorian-era 'justice of the peace' and other identification stamps for manually processing applications that can be bought by anyone on the internet for $16 with no questions asked.

There is no suggestion companies offering the stamps are aware of their unlawful use.

Westpac and CBA said they have specialist cyber security teams and are using sophisticated technologies to combat the threat.

"Westpac has no tolerance for fraud and has various procedures in place to validate paper-based documentation," a spokesman said.

"We have an extensive cybersecurity team that monitor external sites and we invest heavily in technology to protect our customers' data, drive growth and enhance the customer experience."

A CBA spokesman said cyber-criminals use a variety of methods to obtain and use sensitive information.

"This information is being sold on the dark net on a regular basis, and in many instances is not up to date or just incorrect," the spokesman said.

"We have invested in world-class cyber-security capabilities, which include intelligence teams and monitoring solutions that detect for any suspicious activity online that might risk our customers' data," he said.

"We also work closely with law enforcement to prevent these activities."

The Financial Review recently disclosed that foreign real estate buyers pay about $200 each for forged Bank of China income and spending statements, employment records and income testimonials.

One 25-page loan application, which had been submitted to a lenders, had been approved by the Foreign Investment Review Board.

Equifax, the global fraud and identity theft specialist, estimates identity theft is increasing by 80 per cent a year, the fastest growing source of fraud for financial institutions

"Former policeman warns of identity theft

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by "Sarah-Jane Tasker.

A former police officer who plans to compete against Australia Post for major government contracts on identity checks has warned that Australia’s verification system is outdated, raising the risk of identity theft.

Geoff Stockton, who clocked up more than 22 years’ experience with the Victorian Police Force, has designed a new digital system to partner with pharmacies to provide a personal identification service.

“Australia’s current system of verifying a person’s identity is largely a paper-based system which has more holes than Swiss cheese and is open to serious problems such as identity theft, fraud and misrepresentation,” he said.

Mr Stockton’s company, the PRM Group — the largest online provider of police checks in Australia — launched PharmacyID about one year ago. It has signed up more than 1500 pharmacists, with plans to take that beyond 2000 by year’s end.

Brian Woodham, director of national sales at PRM and PharmacyID, said Australia Post had a monopoly on identity checks but had never offered a full digital service.

“No one is doing this service to the scale we are talking about with digital technologies,” he said.

“We are here to be competition for Australia Post. We have been in discussions with the government about various aspects of our business and the direction the government is preparing to go with this sort of stuff.

“There is a big passport application tender coming out at the end of this year, beginning of next year, and we are going to compete with Australia Post.”

Mr Stockton added that the Pharmacy Guild had previously approached him to see if it could win back the tender for passports, which pharmacies used to process.

“They are the most trusted organisation in Australia,” he said. “ If we went head to head with Australia Post on things like passports, we know where people would rather go.”

Mr Woodham said Australia Post offered a “good enough” service but he said he believed that PharmacyID had the perfect vehicle to move into the 21st and 22nd centuries.

Mr Stockton said the ability for people to create a digital identity was now unparalleled because of the power of applications such as photoshop, which allowed people to easily create or alter digital images.

He said many people had had their identities stolen, with significant impacts on their lives and that of their families.

The PharmacyID head said that through the service he had created, he had a chance to make a dent in identity theft through the electronic ID service.

The system he created sees PharmacyID pay the pharmacist about the cost of a script.

Mr Stockton said the service had started with online police checks. A person would apply online for a police check and then print out a receipt with a bar code and take that to the pharmacy to be scanned.

“The original documents don’t need to leave the person’s hand and the pharmacist is now getting paid for something they never traditionally got paid for.”