Australia’s $4.6 billion financial services sector is facing growing risks from cyber-related fraud, warns a report by AUSTRAC.

AUSTRAC, the Commonwealth’s financial intelligence agency, is raising alarm bells about the impact of cyber-fraud on Australia’s $4.6 billion financial services sector.

These concerns, highlighted in AUSTRAC’s “Money Laundering and Terrorism Financing Risk Assessment” report, noted that cyber-fraud has become one of the most reported crime types for the industry.

The AUSTRAC report drew on industry-wide responses. More than 50 per cent of “suspicious matter reports” involved cyber-fraud.

“Reporting entities consulted for this assessment concurred that cyber-enabled fraud was one of the most significant issues for the sector.”

Cyber-fraud refers to crimes where computers or ICT are an integral part of an offence, such as online identity theft.

Financial planners have also acknowledged that threats from cyber criminals are growing in scale and sophistication.

“Financial planners are particularly vulnerable to cyber-enabled fraud attacks when acting as a gateway between customers and financial institutions or product issuers.”

Among the reported episodes, there were cases where a third party hacked a customer’s email and used it to instruct the financial planner to withdraw or transfer funds, often into intermediary, or ‘mule’ bank accounts.

Social media also came under scrutiny. These channels were being used to either hack an account or rely on publicly-available information to gather information about a customer.

AUSTRAC has warned that there is significant under-reporting of suspicious matters by financial planners.

AUSTRAC’s CEO Paul Jevtovic said it was important for the industry to detect, understand and disrupt criminal threats. “That’s why this type of industry partnership has become an important feature of the agency’s work and is essential in the fight against financial crime.”

Earlier, AUSTRAC, established a dedicated cyber team to identify online terrorism financing activities, money laundering and financial fraud.

This team is using financial and cyber intelligence to investigate online payment platforms and financial cybercrime to crack down on money-laundering and criminal networks.

The agency will team with iDcare, Australia and New Zealand’s national identity support service, to target job recruitment scams that organised criminal syndicates use to recruit innocent people as money mules.

Other partners include the Australian Cybercrime Online Reporting Network Joint Management Group to identify patterns and trends that could indicate large-scale financial scams or their methodology.

Report details are available here.