Earlier this week, the Australian Taxation Office admitted that “a small amount of fraudulent activity associated with the program” had been detected, but it insisted that its systems were not hacked.
However, speaking in front of a parliamentary inquiry on COVID-19, AFP Commissioner Reece Kershaw said that, according to their assessment, there are up to 150 victims of “this particular fraud”.
Mr Kershaw disclosed that the AFP has so far executed five search warrants and frozen bank accounts with approximately $120,000 all up.
“We’re working together with the ATO and AUSTRAC, and through the Fintel Alliance and the Serious Financial Crime Taskforce,” he said.
“There are a lot of agencies involved with this. We’re moving very quickly in relation to this, as are the ATO. We don’t want to tip off the offenders involved in this, given the fact that we have made no arrests at this stage.”
He revealed that the AFP first became aware of the alleged fraud on 1 May, after AUSTRAC first uncovered the alleged fraud at the end of April and alerted the ATO.
Mr Kershaw continued: “We’re working with the ATO, and the relevant super funds as well, in relation to establishing, first of all — I’ll use the words ‘up to 150 possible victims’, because we’re having to resolve whether it has legitimately gone to those clients or not.
“There’s still a lot of work to do, but our earliest assessment is it could be up to 150 who have had their $10,000, or up to $10,000, defrauded from their superannuation fund.”
Also addressing the Senate, Commissioner of Taxation Chris Jordan opined that the incident doesn’t appear to have been a “breach against us or our system”, rather it may have been one targeted at tax agents.
“When they get to this really higher level of sophistication, it doesn’t tend to be a breach against us or our systems,” Mr Jordan said.
“It’s others who have the information that we use to verify people. That information is in the hands of other people — agents.
“I’m not in any way trying to be critical of agents, but there are some without the same level of security of that information as others. The sophisticated breaches tend to come through those intermediaries, not directly into our system. It’s rare for our system to be breached.”
Who is liable?
Discussing liability, chair of the ATO’s COVID taskforce, Jeremy Geale, said it would rest with the individual super funds and not the ATO.
“The obligation with regard to these and fraud would sit with the superannuation fund. It wouldn’t sit with the Australian Taxation Office,” Mr Geale said.
“As a general statement in terms of a fraud on the system, if there’s been a fraud on the funds, it would be a fraud on the funds. It’s early release of superannuation from those funds — that is, without knowing the specific details of the fraud.”
However, deputy secretary of the Treasury’s fiscal group Jenny Wilkinson warned that liability in the event of fraud will depend on the exact circumstances surrounding the particular case.
She said: “It depends on the conduct associated with the fraud. Liability could be attributed to the trustee of a super fund, it could be attributed to the administrator, it could be attributed to a government agency or it could be attributed to a party that’s acted on behalf of the member.
“It really depends a lot on the details of a particular case that we’re talking about.”