Master’s Office flags fake-death fraud linked to financial institution

Asisa says criminals exploit weaknesses in the largely paper-based systems. The Master’s Office says more needs to be done by all institutions involved in managing deceased estates to combat fraud, noting that it is aware of three cases linked to the same financial institution in which people were allegedly falsely recorded as dead and their assets stolen while they were still alive. Two of the three were living overseas, says Palesa Rammitlwa, spokesperson for the Department of Justice and Constitutional Development. Rammitlwa says the Master’s Office is committed to reducing the risk of deceased estate fraud, but also shares “concerns that syndicates may be operating within financial institutions”. She confirms that the office is aware of multiple fraud cases linked to a particular unnamed bank. The fraud, which is on the rise, can involve criminals illegally claiming life insurance payouts and other estate assets, including those belonging to people who have been falsely reported as dead. Rammitlwa says the “master’s office concerns extend to suspected abuse of department of home affairs processes and the alleged issuing of fraudulent death documentation by medical practitioners”. Sophisticated syndicates can plan deceased estate fraud months in advance, making it impossible at times for banks and insurers to detect fraudulent claims, says South African Insurance Crime Bureau investigator Johan Steyn. How people are falsely declared dead Steyn says falsely recording a living person as dead is highly complex, and often involves compromised lawyers, possibly corrupt doctors, mortuary officials, insiders at a Master’s Office and people paid to falsely identify a body. By the time documents are submitted to the Master’s Office and claims are lodged with insurers or asset managers, the paperwork may appear legitimate. Syndicates may also exploit the trust of elderly people by identifying or posing as caregivers. These individuals can gain access to their personal details and banking passwords, Steyn says. In some cases, a caregiver may be persuaded to change the beneficiaries of a life insurance policy using the older person’s computer. This can make the transaction appear legitimate to the insurer. Months later, the person may be falsely declared dead and their policies paid out without their knowledge. Steyn urges families to vet caregivers carefully. He says syndicates may also work with mortuaries and doctors willing to sign death certificates without examining a body. In other cases, an informant is paid to falsely identify a body as a relative, claiming that the deceased person’s identity document has been lost. Steyn describes such informants as “money mules”, who may receive a few hundred or a few thousand rand to use their fingerprints in obtaining a death certificate from Home Affairs. Even if the informant is later traced and identified, they are not the masterminds. Once a death certificate has been issued, syndicates can submit documents to the Master’s Office to open a deceased estate. If beneficiaries have already been changed and compromised legal practitioners are involved in administering the estate, the proceeds of insurance or other assets can be diverted to the new beneficiaries. Paper-based systems create vulnerabilities The Association for Savings and Investment South Africa (Asisa) began collecting deceased estate fraud statistics from financial institutions in 2023. It recorded an increase in cases the following year and established a task team to address the problem. Helen du Toit, a member of Asisa’s Forensic Standing Committee, previously told Moneyweb that criminals exploit a fragmented, largely paper-based process involving Home Affairs officials, undertakers, the Master’s Offices, lawyers, family members and financial institutions. Experts have suggested digitising the Master’s Office so that documents required to wind up an estate – including wills, asset lists, death certificates and powers of attorney – can be submitted securely. Rammitlwa says the Master’s Office is one of several role players involved in administering and winding up estates. While digitisation could reduce reliance on paper and improve document security, she cautions that it would not, on its own, address all the vulnerabilities that enable fraud. Stronger controls are needed across all institutions involved, she says. The Master’s Office has found documents from its offices in the possession of unauthorised third parties allegedly linked to a syndicate defrauding beneficiaries. It has introduced QR codes to improve the security and verification of letters of executorship and letters of authority. Rammitlwa says specialised IT expertise is also needed to maintain secure online systems and respond to emerging cybersecurity threats. She raises further concerns about “runners” employed by estate administrators, including legal practitioners and other professionals, who repeatedly seek access to Master’s Office officials. Steyn also identifies people paid by families to queue and submit documents as risky. “Documents have also been reported missing. Stricter controls are therefore required to regulate access to estate information and documents,” Rammitlwa says. She adds that private institutions have a responsibility to safeguard sensitive information and ensure the integrity of employees who handle it. The same responsibility rests with the Master’s Offices. Home Affairs moves to digitise records The Department of Home Affairs says it is working to digitise records across the death registration chain, including those held by hospitals and provincial forensic pathology services. Spokesperson Ndileka Cola says most financial institutions have signed memoranda of agreement with the department to exchange information to help prevent and detect fraud. Cola says in order to stop incorrect reporting of deaths, “where a funeral undertaker acts as an informant on behalf of the deceased’s family, proof of appointment confirming their authority to report the death must be submitted”. “A designation may be withdrawn where the applicable requirements are not met, subject to the prescribed procedures. “These measures promote accountability and help ensure that death notifications are submitted through authorised channels.” This article was republished from Moneyweb. Read the original here.