Superannuation and pension products and services present various levels of vulnerability. Lower risk products include eligible rollover funds and defined benefits funds where they do not allow members to make contributions.
Higher risk products include accumulation funds and post-preservation accounts, which allow relatively easier movement of funds.
However, specific characteristics make the sector vulnerable to ML/TF and predicate crimes.
The Money Laundering and Terrorism Financing (ML/TF) risks associated with superannuation and pensions include:
- Low levels of member engagement;
- Voluntary contributions to accumulation accounts by members, where the source of money is difficult to verify;
- Payments to members and outgoing rollovers that are vulnerable to fraud and illegal early release;
- A growing reliance on online delivery of products and services, resulting in less face-to face interaction with customers; and
- The use of third parties and intermediaries.
Superannuation and pension must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.