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Jennifer Lowe

Apr 27, 2023

CFX investment and SMSF

in SMSF Technical Forum

I have had a run of Funds come in for audit that have investment in CFX who, some (including ASIC) have alleged, are running nothing more than a Ponzi scheme. The account is under the SMSF name, the transactions are printable and I've received an account balance substantiation letter from the company as at 30/6. But its a Panamanian company, its Board and ownership are opaque and as it is an unregistered investment scheme, the Funds have breached SIS by investing in it, I believe.

Can anyone set me straight if I have this wrong?

5 comments

Comments (5)

David Hansen

Jul 18, 2023

Did you breach Part A that the financials may not be accurate, Jennifer?

Jennifer Lowe

Jul 18, 2023

Replying to

Yes I did - and also answered yes to the question asking if I believed the Fund's financial positon had bcome unsatisfactory. Due to losing 80% of Fund value within 6 months.

Jennifer Lowe

Jul 12, 2023

Update - I did end up reporting these as breaches, its large sums of money and some funds have lost 80% of the value already after a year. Its difficult as the trustees still believe its a legit investment, so will not be volunteering the info to the ATO. I am happy to be unpopular with them if it prevents them losing the rest of their super, I imagine that once they eventially realise its a scam, they will be wanting to know why their advisors didn't stop them or rasie concerns, at least the auditor has tried.

THE AUDITORS INSTITUTE

Jul 12, 2023

Replying to

Hi Jennifer

Thanks for the update. Please let us know if you hear from the ATO re the reported breaches.

Regards

THE AUDITORS INSTITUTE

Apr 27, 2023

Hi Jennifer

I had not heard of CFX so had to google it.

ASIC refer to "Cash FX Group" (which I assume is what you are referring to) & have an alert at:

https://asic.gov.au/about-asic/news-centre/articles/alert-suspicious-investment-opportunity-from-cash-fx-group/

There are articles on the internet re Cash FX being a scam. I do not have any experience with this investment so hard for me to comment.

As an auditor it may be difficult to decide if a scam is to be treated as a breach of SIS. The scam arguably is an investment that the Fund has made that has $0 value.

I have discussed a SMSF scam with the ATO previously and they raised the issue that the trustees should voluntarily disclose it (to the ATO) in relation to it possibly being a breach of the early access to superannuation rule.

It would be great to get other members views re this query.

Thanks

SMSF AAA