AI investment scams and the criminal law.

The warning.

Investment scams are now the top scam category in Australia by reported loss. Police and the corporate regulator both raised the alarm in July 2026. The Joint Policing Cybercrime Coordination Centre, led by the AFP, ran a public campaign warning that scam networks are using AI tools to build fake trading platforms, fake financial advisers, and fake celebrity endorsements. The Australian Securities and Investments Commission has been shutting down hundreds of scam websites that use stolen images of well-known people.

The technology is new. The offences are not. An AI-generated deepfake of a public figure spruiking a fake trading bot engages the same fraud, proceeds of crime, identity and financial-services offences that have applied to investment fraud for years. What AI changes is the scale and the polish, not the legal character of the conduct. This article walks through the main offences, the penalties, and where the criminal law reaches the people involved.

A note at the outset. The people who lose money in these schemes are victims. The criminal law is aimed at the operators of the scheme and at those who help launder the money. Nothing here is a comment on any particular investigation or any particular person.

What offence is running an investment scam in Australia?

The central charge is fraud. At the Commonwealth level, the two main offences sit in the Criminal Code Act 1995 (Cth). Section 134.1 makes it an offence to obtain property belonging to another by a deception, dishonestly. Section 134.2 makes it an offence to obtain a financial advantage from another by a deception, dishonestly. A fake investment platform that takes a person's money on a false promise fits squarely inside both.

There is also a wider offence. Section 135.1 covers general dishonesty, where a person does something dishonest to obtain a gain, cause a loss, or dishonestly cause a loss to another. Section 135.4 covers conspiracy to defraud, which is the charge often used against organised networks where several people agree to run the scheme together.

The states have their own fraud offences that run in parallel. In New South Wales, section 192E of the Crimes Act 1900 (NSW) makes it an offence to dishonestly obtain property or a financial advantage, or to cause a financial disadvantage, by deception. Where a scam is run online through offshore infrastructure and Australian bank accounts, the Commonwealth offences usually do the work, but a state fraud charge remains available. Our page on fraud in NSW sets out the state offence in more detail.

What is the maximum penalty for obtaining a financial advantage by deception?

The maximum penalty for obtaining a financial advantage by deception under section 134.2 of the Criminal Code (Cth) is 10 years imprisonment. Obtaining property by deception under section 134.1 carries the same 10-year maximum. General dishonesty under section 135.1 carries a lower maximum of 5 years. Conspiracy to defraud under section 135.4 carries 10 years.

The maximum is the ceiling, not the starting point. A court sentencing a Commonwealth fraud applies section 16A of the Crimes Act 1914 (Cth), which lists the factors that shape the sentence. The amount taken, the number of victims, the degree of planning, the role of the accused in the scheme, and any plea of guilty all bear on where the sentence lands. A person at the centre of an organised network sits high in the range. A person recruited at the edge to perform a limited task sits lower.

Is it illegal to be a money mule in Australia?

Yes. A money mule is a person who lets stolen money pass through their own bank account, or who rents or sells their account to a syndicate. This is dealing with the proceeds of crime. The offences sit in Division 400 of the Criminal Code Act 1995 (Cth), with state equivalents such as section 193B of the Crimes Act 1900 (NSW).

The Division 400 offences are graded two ways. They rise with the amount of money dealt with, and they rise with the person's state of mind. Dealing with money the person knew was proceeds of crime is the most serious form and the largest amounts carry maximum terms up to life imprisonment. Dealing while reckless as to whether the money was proceeds of crime carries lower maximums, and dealing negligently lower again. The point that catches people out is that you do not need to have known. Recklessness is enough. A person who agrees to move money for a stranger, and who deliberately avoids asking where it came from, is exposed.

The AFP has repeatedly warned that renting, buying or selling a bank account is a crime. Students, new arrivals, and people in financial stress are the usual targets of recruitment. The consequences are real. We cover the dealing offences in our explainer on money laundering and Division 400, and the state offence on our page on proceeds of crime in NSW.

Are deepfake celebrity endorsements against the law?

A deepfake video that puts false words in the mouth of a well-known person, to lure viewers into a scam, is part of a fraud. The deception is the whole point of the video, so it feeds straight into the section 134 fraud offences above. There is no separate need for a stand-alone deepfake offence to prosecute the scheme.

Making the deepfake can also engage the identity crime offences. Division 372 of the Criminal Code (Cth) makes it an offence to deal in identification information with the intention that it be used to commit or help commit an offence. Where a scam uses a real person's name, image and likeness to build a fake endorsement or a fake trading account, those provisions can apply, alongside the state identity fraud offences. Our page on identity fraud in NSW explains the state route.

What is a pump-and-dump, and is it a crime?

A pump-and-dump works by talking up a share or a crypto token to inflate its price, then selling out at the top and leaving the followers holding a falling asset. AI has made the pitch cheaper to produce and harder to spot. The regulator warned in 2026 that these schemes are surging and that fake celebrity endorsements are being used to draw people into private messaging groups where the ramping happens.

This is market misconduct under the Corporations Act 2001 (Cth). Section 1041A prohibits market manipulation. Section 1041E prohibits making a false or misleading statement that is likely to induce others to deal in a financial product. Section 1041G prohibits dishonest conduct in the course of a financial services business. These are serious offences, and the maximum terms for the worst market-misconduct offending now run to 15 years imprisonment. They sit alongside, not instead of, the fraud and proceeds of crime charges already described.

Can you go to jail for running a financial services business without a licence?

Yes. Section 911A of the Corporations Act 2001 (Cth) requires a person who carries on a financial services business in Australia to hold an Australian Financial Services Licence, unless an exemption applies. Carrying on such a business without a licence is a criminal offence. For an individual the maximum is 5 years imprisonment, a fine, or both. For a company the fine runs into the millions. There are also civil penalty routes the regulator can take instead of, or as well as, a criminal charge.

A fake trading platform is, by design, an unlicensed financial services business dressed up to look licensed. So the licensing offence is often charged alongside the fraud. It gives the prosecution a second, simpler count that does not depend on proving a particular victim was deceived.

Does using AI make the fraud more serious?

There is no separate charge for using AI, and using AI does not create a new offence. What it can do is affect the sentence. Planning and organisation are treated as making an offence more serious. A scheme that uses AI to build convincing fake platforms, generate fake advisers, and target victims at scale shows planning and reach. A sentencing court can take that into account under section 16A of the Crimes Act 1914 (Cth) when it assesses how serious the offending is.

The flip side matters for the defence. The role of the accused is often the most important question at sentence. Many people caught in these networks are not the architects. They are recruited to open accounts, collect cards, or move funds, sometimes without a full picture of the scheme. Establishing the true role, and the true state of knowledge, is central to the defence of a person on the edge of a network.

What to do if police contact you about a scam or a bank account.

People are often contacted after money linked to a scam has passed through an account in their name. That contact can come as a phone call, a request to attend a police station, or a search. The single most useful step is to get advice before you answer questions. You are not required to take part in a police interview, and what is said in an interview is used to build the case. Our guide on the police interview and the ERISP explains the process and your rights.

If you have lost money as a victim, the path is different. Report the loss to your bank straight away so any transfer can be stopped or traced, report it to Scamwatch, and make a police report. Quick reporting gives the best chance of a freeze while the money is still in the system.

Frequently asked.

Is it a crime if I did not know the money was from a scam?

It can be. The proceeds of crime offences in Division 400 of the Criminal Code (Cth) are graded by the person's state of mind. Dealing with money you knew was proceeds of crime is the most serious form. But dealing while reckless as to whether it was proceeds of crime, or even negligent, is also an offence, with lower maximum penalties. A person who lets someone use their bank account without asking hard questions can still be charged.

Which court hears a large fraud charge?

It depends on the charge and the amount. A Commonwealth fraud charge under section 134.2 of the Criminal Code is indictable and, if contested, is heard in the District Court. Smaller matters can be dealt with summarily in the Local Court by consent. A large, organised fraud with a high loss is committed for trial to the District Court.

Can money paid into a scam be restrained or recovered?

Sometimes. The Proceeds of Crime Act 2002 (Cth) lets authorities apply to restrain and later forfeit money and property linked to an offence. Banks can also freeze accounts on suspicion. Recovery for a victim is not guaranteed and often the money has already moved offshore, which is why early reporting matters.

Is losing money in a scam a crime for the victim?

No. A person who is deceived into investing and loses money is a victim, not an offender. The criminal law is aimed at the people who run the scheme and the people who move the money. A victim should report the loss to Scamwatch, their bank, and police.

What is the difference between a state and a Commonwealth fraud charge?

State fraud, such as section 192E of the Crimes Act 1900 (NSW), covers dishonestly obtaining property or a financial advantage by deception within the state. Commonwealth fraud under sections 134.1 and 134.2 of the Criminal Code (Cth) applies where a Commonwealth interest is engaged or the conduct crosses borders, which is common in online scams run through carriage services and offshore networks.

Primary sources: Criminal Code Act 1995 (Cth); Corporations Act 2001 (Cth); Crimes Act 1900 (NSW).

To speak to a criminal defence lawyer, call Aaron Kernaghan on 0421 717 019.

This article is written by Aaron Kernaghan, criminal defence lawyer at Good Legal Lawyers, as at 24 July 2026. It is commentary and reflects the personal opinion of the author only. It is not legal advice, it is not a substitute for advice on your own matter, and it does not purport to be accurate or complete. Any matter referred to may be before the court and any person charged is presumed innocent. For advice on a specific matter, contact Aaron Kernaghan on 0421 717 019 or contact the firm.

More criminal-law commentary by Aaron Kernaghan.

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