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Allegations of identity theft involving 150 Australians have forced the government to pause the early release of superannuation, after police froze $120,000 believed to have been ripped off from retirement savings.

On Friday the assistant treasurer, Michael Sukkar, announced the Australian Tax Office would pause requests for early access of superannuation until Monday “out of an abundance of caution” to consider further anti-fraud protection.

The Australian federal police told the Senate Covid-19 inquiry a “sophisticated” attack including an “intrusion into a third party” had allowed impersonation of workers seeking early access of up to $10,000 superannuation each.

The incident has prompted Labor to accuse the government of failing to heed warnings from the superannuation industry about “serious flaws” in the system for early release of retirement savings.

Sukkar said there had been “one isolated incident where … it is fair to say identity theft has been involved”, allowing “bogus claims” for early release of superannuation.

He insisted it was “not a compromise of the ATO” and described the program as extraordinarily but also “sadly” popular, as 1.2 million workers applied to release more than $10bn in savings to tide them over during the coronavirus crisis.

Sukkar noted the matter had been referred to the AFP.

“As part of that process, for today only, the ATO will pause requests for early superannuation being sent to super funds – just for today – so they’ll resume on Monday,” he told Sky News.

“Because we want the ATO today, out of an abundance of caution, to make sure that there’s nothing more we can do to help people protect their data, to ensure that people are not the victims of identity theft.”

Sukkar said ATO and taxpayers’ information was “under constant attack” and “this program is no different”.

Labor’s economics team, including the shadow assistant treasurer, Stephen Jones, accused the government of trying to “blame the victims of fraud enabled by a system it created” by suggesting the incident was caused by their failure to protect their own data.

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“This is not business as usual,” they said. “The government has designed a system for speed, not accuracy.

“With more than a million applications for early access to superannuation, Australians cannot afford their government to be complacent.”

Labor pointed to a letter sent to the government on 20 April from the Association of Superannuation Funds of Australia, Industry Super Australia and the peak body for super trustees calling for more protections.

While supporting the early release of super, the peak bodies said they were concerned that suggestions to increase safety were ignored.

These included a plan to forward the money to the ATO to pass on to taxpayers “prior verification of bank account details submitted via MyGov by the ATO against member account details held by banks”, and a demand to indemnify funds against fraud or money laundering risks.

They warned that super funds would be liable for fraud, but were also required to release funds within five days, putting trustees in the “unenviable situation” of having “limited scope” to minimise the risk of fraud.

On 1 May the assistant minister for superannuation, Jane Hume, responded, saying the superannuation sector needed to “play its role in assisting Australians most in need”, referring to Scott Morrison’s invocation of “the need for ‘Team Australia’ to step up”.

Hume said an “ATO pays model” would delay payments and the ATO had no authority to do so, meaning months of delay to pass required legislation.

Hume said the ATO had “substantial checks in place to guard against fraud” including two-factor authentication for 80% of users, verifying bank account information in real time, and text messages to applicants that would provide “an additional opportunity to prevent fraudulent withdrawals”.

Source: The Guardian

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