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AUSTRAC orders audit of Afterpay

Australia's financial intelligence agency AUSTRAC has ordered the appointment of an external auditor to Afterpay, an Australian financial technology company operating in the US, UK, Australia and New Zealand, to examine its compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act). Afterpay is a leader in the ‘buy now pay later’ industry.

The AUSTRAC ruling has followed a period of ongoing engagement with Afterpay where AUSTRAC has identified concerns with its compliance. The external auditor will examine Afterpay’s:

  • Governance and oversight of decisions related to its AML/CTF framework
  • Identification and verification of customers
  • Suspicious matter reporting obligations
  • AML/CTF program, including the development of its money laundering and terrorism financing risk assessment

AUSTRAC Chief Executive Officer, Nicole Rose PSM said the buy now, pay later sector has experienced rapid growth in recent years and this appointment reminds new financial services businesses that they have obligations under the AML/CTF Act and they must take these seriously.

“The audit will help identify if Afterpay has developed and implemented the systems and controls it needs to ensure it complies with its obligations. These laws are in place to protect businesses, the financial system and the Australian community from criminal threats,” Rose said.

The audit will be used to determine the extent of any compliance issues and whether further regulatory action concerning Afterpay is required.

“AUSTRAC will continue to work with Afterpay to assist the company to mature and strengthen its compliance processes, staff training and suspicious matter reporting,” Rose said. “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.”

The extent of the auditor’s examination is determined by AUSTRAC and will be at Afterpay’s expense. A preliminary audit report must be provided to AUSTRAC within 60 days.

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