Wednesday, October 28, 2020

Afterpay faces audit after AUSTRAC order on money laundering concerns

-

Afterpay Touch shares have closed down 12 per cent as the high-flying buy now, pay later company faces questions about its compliance with Australia’s anti-money laundering and terrorism financing law.

Federal financial intelligence agency AUSTRAC said on Thursday it had ordered Afterpay to hire an external auditor to probe Afterpay’s compliance with the 2006 law, and threatened unspecified action if the firm wasn’t taking it seriously.

Afterpay last week disclosed that the audit was a possibility and said that further action “could include civil penalty proceedings, fines, remedial directions, and enforceable undertakings”.

Afterpay shares closed down $3.09, or 12.1 per cent, to a two-week low of $22.55.

- Advertisement -

AUSTRAC’s concerns specifically revolve around the identification and verification of customers, its suspicious matter reporting obligations and its governance and oversight of decisions related to its anti-money laundering and counter-terrorism financing (AML/CTF) framework.

“The audit will help identify if Afterpay has developed and implemented the systems and controls it needs to ensure it complies with its obligations,” AUSTRAC chief executive Nicole Rose said.

Ms Rose said AUSTRAC would work with Afterpay to mature and strengthen its compliance processes and staff training.

“But we will not hesitate to take action where an organisation is failing to appropriately protect itself and Australia’s financial system from criminal activity.”

- Advertisement -

The audit will be at Afterpay’s expense, with a preliminary report due to AUSTRAC within 60 days and a final version due within 120 days.

“We welcome the opportunity to continue to work closely and constructively with AUSTRAC and we will approach this formal process as an opportunity to ensure that our AML/CTF compliance is robust,” Afterpay said.

“We are committed to remaining focused on becoming better at what we do.”

Afterpay noted that customers use its service to budget for small value transactions, with an average value of $148 and a maximum value of $1,500.

It said it recognised that the buy now, pay later sector is a new sector for regulators and wanted to work constructively with AUSTRAC to develop compliance policies specific to its business.

AUSTRAC said it ordered the audit following “a period of ongoing engagement with Afterpay where AUSTRAC has identified concerns with its compliance”.

In disclosing the audit risk last Thursday, Afterpay said it was in the process of commissioning an independent review of its AML/CTF framework.

Afterpay has been one of the hottest stocks on the ASX200, having more than doubled since the start of the year.

But it has yet to turn a profit as it pursues growth, gaining 7,900 new customers a day so far this year.

Burdensome identity-verification requirements that makes the service more cumbersome to use would likely hurt its prospects.

Afterpay said it didn’t expect any impact to arise “on the way customers and merchants currently experience the Afterpay service”.

Afterpay rivals Zip Co, Splitit and FlexiGroup also closed down, between 4.8 and 5.3 per cent.

- Advertisement -

MUST READ

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

Texas attorney general Ken Paxton fires top aide who accused him of bribery

Lacey Mase, one of the top aides who accused Texas Attorney General Ken Paxton of crimes including bribery and abuse of office, has been fired, she told The...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Fundraiser Elliott Broidy pleads guilty in foreign agent case linked to 1MDB

Major Republican Party and Trump fundraiser Elliott Broidy pleaded guilty Tuesday to acting as an unregistered foreign agent, admitting to accepting millions...

Newark city councilman charged in bribery and kickback scheme

Joseph A. McCallum Jr., a city councilman in Newark's West Ward, has been accused of taking part in a "bribery and kickback" scheme involving...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks