Superannuation trustees can expect to encounter more issues of money laundering as a greater number of their members reach retirement age - at least that’s one of the missives dished out by AUSTRAC deputy CEO Katie Miller to attendees at this year’s ASFA Conference 2025.
This isn’t the first time the government's anti-money laundering (AML) watchdog has flagged incidents of dodgy activity within the super sector.
However, Miller drilled down on these suspicions by warning the sector to prepare for an uptick in bad actors trying to capitalise on a system that’s ill-prepared for this type of behaviour.
There is no specific figure available that quantifies the total value of money laundering within the superannuation sector; however, last year, AUSTRAC claimed that criminal groups were directly responsible for between 10% and 50% of criminal proceeds generated from superannuation fraud.
AUSTRAC’s Cost of Crime report also noted that super fraud was likely to remain a stable money laundering threat over the next three years.
“The fundamental role of superannuation for Australia’s ageing population, and the ongoing increase in superannuation balances, will ensure this sector remains highly attractive to criminal individuals,” it said.
“Given that money laundering methodologies are used to move superannuation funds that are illegally accessed, the money laundering threat from superannuation fraud will remain an ongoing issue.”
Lower risk than banks
Fast forward to November 2025, and Miller has reminded the sector not to become complacent.
In other words, just because a greater number of Australians are reaching the age when they can access their super, doesn’t by default mean the risk of money laundering is improving.
"Traditionally, superannuation has been seen as very, I won't say low risk, but it's been seen as a lower risk than banks, because the money is locked away for so long,” she noted.
As you get more people over the age of 60 and they are able to both put large voluntary contributions in as well as take the money out, it does become a much greater risk for that value transfer."
Super fund dilemma
Given that convenience and security are at opposite ends of the spectrum, Miller also reminded super funds of their dilemma around where to place their member services and the right level of interaction on that spectrum.
She’s implying that the easier it is for customers, by default, the easier it will also be for criminals to abuse the system too.
If you want things to be really secure, you may get to a point where it's not as convenient for customers," Miller said.
"It is about introducing a bit more friction, slowing things down, giving time for checks to be made."
While super funds clearly want a good customer experience, she encourages super funds to second-guess the urgency around some of these transactions.
Unlike a financial transaction institution, like a bank, where there’s a need to pay for groceries right now, she says super funds should raise a red flag when customers - outside of the usual customer financial profile - might be accessing super funds.
"What are the actual time pressures involved, and where can you put in some friction so that you can make these checks both on who your customer is, but also on why they might be accessing superannuation funds, particularly if it's outside of the usual customer profile?" Miller suggests super funds raise these questions if they suspect money laundering.
ASIC sharpens focus
While super funds are already subject to anti-money laundering (AML) obligations under AUSTRAC controls, the regulator (ASIC) doubts whether existing controls are sufficient to address financial crime-related risks.
While ASIC is sharpening its focus on super fund compliance, it is also placing the onus on trustees to either take action or potentially incur enforcement action if they fail to act on scam-related risks.
Key measures that ASIC expects super funds to implement include:
- Conducting an internal gap analysis to assess whether AML programmes adequately protect funds will be the first step towards improving detection.
- Unifying risk monitoring applications, tools, and data into one case management environment helps to build a holistic view of risk across the entire business value chain and reduces Total Cost of Ownership.
- Strengthening AML detection measures not just as a regulatory requirement but also to protecting members' hard-earned savings from financial crime.
Money laundering red-flags raised by AUSTRAC: What to look out for
A customer:
- Makes unusually large and/or regular large contributions into a superannuation fund followed by rollovers of funds into a separate superannuation fund or self-managed superannuation fund (SMSF).
- Makes unusually large and/or regular contributions that do not match their financial profile.
- Breaks up a large contribution into multiple smaller contributions below the $10,000 reporting threshold (this is known as ‘structuring’).
- Establishes a superannuation account and consolidates balances from multiple funds, and then immediately transfers or withdraws the full amount.
- Is linked to adverse media
Fraud red flags raised by AUSTRAC: What to look out for
A customer:
- Accesses their super early, withdraws the maximum amount allowed and then rolls over the remaining balance into a new super fund.
- Whose account has unusual account activity or unauthorised requests by the member’s close relatives.
- Provides documents from Commonwealth agencies in support of financial hardship claims that appear to be fraudulent or tampered with.
- Provides fraudulent or altered identification documents in an attempt to gain early access to superannuation.
- Makes fraudulent attempts to nominate someone as a beneficiary of a death benefit to illegally gain access to superannuation.
- Provides fraudulent or altered medical certificates in an attempt to gain access to an insurance benefit under a superannuation fund.
- Submits numerous fraudulent financial hardship claims for early withdrawal of their super funds.
