Income Asset Management Uncovers Suspected Fraud, Client Funds Safe
Income Asset Management has uncovered suspected fraudulent transfers linked to a minority sub-custodian, confirming no client assets were compromised. The company is investigating further and will update the market soon.
- Suspected fraudulent transfers identified from minority sub-custodian bank account
- No client funds or assets were involved in the diversion
- Fraud occurred before funds reached Income Asset Management accounts
- Bond custody moved to Perpetual Corporate Trust in January 2025
- Company notified insurers and plans detailed update on 22 September
Background and Discovery
Income Asset Management Group Limited (ASX – IAM) has revealed it identified suspected fraudulent transfers originating from a bank account held by one of its minority sub-custodians. The discovery came as part of an ongoing review of account reconciliations, a critical process for ensuring the accuracy and integrity of financial records.
Importantly, the company has confirmed that these transfers did not involve client funds or assets. The diversion occurred before the monies reached IAM’s accounts, meaning neither the company’s finance team nor its auditors had visibility of these transactions. Consequently, any revenue associated with these funds is unlikely to have been recorded in the company’s financial statements for the fiscal year 2025.
Operational Changes and Risk Mitigation
The fraudulent activity took place during a period when bond administration and custody services were managed by a previous sub-custodian. In January 2025, IAM transitioned its bond administration and custody to Perpetual Corporate Trust, a well-regarded Australian custodian, as part of its efforts to strengthen operational controls and safeguard assets.
Despite the incident, IAM asserts it maintains sufficient resources to continue operating normally and fulfilling its obligations to clients and shareholders. The company also holds fidelity insurance to cover theft, and relevant insurers have been promptly notified.
Looking Ahead
IAM has committed to transparency and will provide a more detailed market announcement on 22 September 2025. This forthcoming update will include findings from ongoing investigations into the account reconciliations and verification of outcomes. The company emphasizes its dedication to protecting client assets and maintaining open communication with regulators, shareholders, and clients throughout this process.
This incident highlights the inherent risks in financial custodianship and the importance of rigorous oversight, especially when multiple custodians are involved. While client assets remain secure, the situation underscores the need for vigilance in operational risk management within the asset management sector.
Bottom Line?
IAM’s next update will be crucial in clarifying the full impact and reinforcing trust in its custodial safeguards.
Questions in the middle?
- What is the total value involved in the suspected fraudulent transfers?
- How will this incident affect IAM’s financial results and future revenue recognition?
- What additional controls will IAM implement to prevent similar occurrences?
