In today’s interconnected financial world, the threat of sophisticated fraud schemes is constantly evolving. One area of increasing concern for Australian financial services (AFS) licensees is share sale fraud. As highlighted by ASIC’s recent guidance in updated Information Sheet 237 Protecting against share sale fraud (INFO 237), this insidious form of fraud, where criminals impersonate legitimate investors to sell shares that don’t belong to them, is on the rise and poses significant risks to both clients and businesses.
The Growing Challenge of Share Sale Fraud
ASIC’s insights underscore the critical vulnerabilities that can be exploited by fraudsters. They often leverage stolen or fabricated identification documents and manipulate contact details to execute their schemes. The consequences are severe, leading to substantial financial and emotional distress for victims, and significant reputational and regulatory risks for financial institutions.
Key areas where ASIC urges AFS licensees to strengthen their defences include:
- Rigorous Client Onboarding: The first line of defence. This involves thoroughly verifying client identities, ensuring that the person you’re dealing with is genuinely who they claim to be.
- Ongoing Due Diligence and Monitoring: Fraud isn’t a one-off event. Continuous monitoring of trading behaviour and client information is crucial to detect unusual patterns or suspicious changes.
- Intermediary Client Oversight: For market participants utilising white-labelling services or dealing with intermediaries, understanding and regularly reviewing their due diligence practices is vital, as direct visibility may be limited.
- Staff Training: Ensuring all staff are well-versed in AML/CTF obligations and fraud detection techniques.
- Prompt Reporting: A commitment to reporting suspicious activities to AUSTRAC immediately is paramount.
The message is clear: proactive, comprehensive measures are no longer optional but a fundamental requirement for maintaining market integrity and customer trust.
LAB Group: Purpose-Built to Prevent Share Sale Fraud
At the forefront of RegTech innovation, LAB Group delivers a suite of integrated digital tools designed to help AFS licensees address the exact vulnerabilities outlined in ASIC’s guidance. LAB’s platform is not only compliant-ready but engineered to actively prevent fraud across the client lifecycle.
- Fortified Client Onboarding with LAB Engage
LAB Engage transforms onboarding into a verified digital experience. With features like multi-factor authentication (email, mobile, DOB), biometric verification, government document validation (DVS), and dynamic risk-based forms, LAB enables accurate identification of clients from the start. This is especially crucial for complex client types like SMSFs, foreign investors, and trusts.
- Continuous Risk Monitoring via LAB Verify
Fraud doesn’t stop at onboarding—neither does LAB’s protection. LAB Verify supports ongoing customer due diligence (OCDD), sanctions and PEP screening, and nested entity analysis through automated UBO tracing. Its fraud detection features – like VPN/IP monitoring and bank account validation – help identify attempts to circumvent detection, even in intermediary or digital-only environments.
- Transparent Oversight in Intermediary and White-Labelled Models
For firms that work with intermediaries, LAB Portal provides robust case management, role-based access, audit trails, and escalation workflows. This ensures that all onboarding and engagement activities are visible and traceable, allowing compliance teams to maintain control and intervene where needed.
- Staff Support and Advisory Through LAB Service
LAB doesn’t just offer software – it offers operational expertise. LAB Service supports teams with verification triage, exception handling, and compliance alignment. This ensures staff are equipped to make fast, informed decisions during potential fraud events and onboarding anomalies.
- Stay Ahead of Regulations
In a constantly changing regulatory environment, LAB Group ensures its platform evolves in lockstep with the law. Regular updates aligned to AML/CTF reforms – including Tranche 1 and Tranche 2 requirements – help clients maintain compliance readiness without the need for constant reconfiguration. With built-in PEP screening, AUSTRAC-ready reporting, and rule-based risk workflows, LAB clients stay prepared for what’s next.
- Real-Time Reporting and Compliance Assurance
With AUSTRAC-ready reporting infrastructure, automated audit trails, and sandbox environments for testing compliance workflows, LAB enables rapid response to fraud indicators. Firms can stay aligned with the latest AML/CTF obligations while scaling their operations securely.
Conclusion: Building Trust in a High-Risk Environment
As share sale fraud becomes more prevalent and sophisticated, compliance teams must move beyond checkbox processes and adopt intelligent, adaptive technology. LAB Group provides AFS licensees with an end-to-end compliance and client lifecycle platform that meets regulatory expectation – and more importantly, defends against real-world fraud.
With LAB, firms don’t just meet their obligations – they strengthen trust, protect investors, and enhance operational resilience.
LAB Group is the compliance infrastructure for Australia’s regulated economy – trusted by industry leaders, engineered for evolving threats.
Want to find out more about our solutions? Book a demonstration now.
