It has become increasingly important to monitor your Australian Financial Services Licence (AFSL) and Australian Credit Licence (ACL) number across a range of platforms to prevent individuals from utilising your licence number and company information to conduct fraudulent activities.
There have been a number of scams related to the fraudulent use of licences, including scammers creating websites and promotional materials to entice customers by using the Australian Business Number, AFSL or ACL number and registered company name of several licensees.
The highly publicised case of Melissa Caddick, the Director of Maliver Pty Limited is a well-known example of such fraudulent activity which resulted in an investigation by the Australian Securities and Investments Commission (ASIC). ASIC’s investigation found that Melissa Caddick may have been providing financial services through the use of another company’s AFSL without their permission. Through the fraudulent use of this AFSL number, Melissa Caddick unlawfully dealt with investor funds for a period of eight (8) years.
One way that licensees can monitor potential unlawful use of their licence is by setting up Google Alerts. In setting up a Google Alert, licensees are able to create alerts for a number of terms including the company name, licence number and the names/numbers of any Authorised Representatives. By creating these alerts, licensees are able to monitor information about their company and any mention of their company in news articles or other website content.
However, we note this is not a foolproof approach as fraudsters can try to prevent you finding their site by:
- Not indexing their site on google
- Not making their site available for search from Australia
Therefore, we also encourage our clients to use a number of search engines (e.g. Bing, Baidu, Yahoo) to monitor their corporate details, and where possible to have monitoring done on a regular basis from outside of Australia or using a VPN which masks your search location.
Fraudulent activity may be detected through these searches and could assist in preventing complaints from clients in relation to fraudulent activity. Further, where unlawful or fraudulent activity is discovered, the licensees are well placed to take action to stop the activity or at least mitigate the damage. Action taken may include:
- Contacting the website domain to notify them of the fraudulent activity and request the website is removed;
- Writing directly to the website owner and calling any contact numbers on the site;
- Where banking detail or payment services are used on the site to collect funds / investments – notify that bank or provider;
- Notifying ASIC of the fraudulent activity via a misconduct report;
- Writing directly to any third parties which incorrectly reference your licence name or number.
Under section 911A(1) of the Corporations Act 2001, a person who carries on a financial services business in Australia must hold an AFSL covering provisions of those financial services. Failure to comply is an offence that carries a penalty of imprisonment and/or a fine for individuals and corporations. Similarly, it is an offence under section 29 of the National Consumer Credit Protection Act 2009 to provide credit services without holding an Australian Credit Licence.
- 20-301MR ASIC to seek appointment of provisional liquidator to Maliver Pty Ltd and receiver and manager to property of Melissa Caddick.
- ASIC cracks down on unlicensed advice.
- MoneySmart: Companies you should not deal with.
If you would like to know more about how this may affect your business, please contact us.