With growing global REE demand, the investigation of cryptic clay-hosted rare earth element (REE) enrichment provides a better understanding of potential new prospects. This study is focused on novel REE enrichment (up to 1.38 wt.% TREO) identified in the regolith overlying the Doradilla Sn skarn prospect, northern New South Wales, Australia. The REE mode of occurrence was investigated through petrographic, field emission scanning electron microscopy (FE-SEM), micro-X-ray fluorescence (µ-XRF), and Laser Raman analyses. Secondary REE-bearing phosphate minerals are the dominant host of the REE in the regolith at Doradilla. The presence of water identified through Laser Raman confirms these minerals as rhabdophane-(La) (La(LREE,Ca)(PO4)·nH2O), hosting most LREE, and churchite-(Y) (Y(HREE,Ca)(PO4)·2H2O), hosting most HREE. Through confirming the majority of REE being hosted in hydrated, and therefore, secondary minerals, this cryptic REE-enrichment is confirmed to be the result of secondary mineralization driven entirely by regolith-derived processes. This study highlights the importance of detailed mineral characterization in confirming the deportment of REEs in clay-hosted settings, and suggests that new protoliths (in this case a Sn skarn) have the potential to form significant, secondary REE enrichment in the overlying clay-hosted, regolith environment.