Australian-founded payments start-up Airwallex is facing an audit from the nation’s financial crimes agency, AUSTRAC, into its suspected failure to obey anti-money laundering and counter-terrorism financing laws.
In a statement on Thursday, AUSTRAC said it had ordered the appointment of an external auditor to assess whether the $12 billion fintech startup is meeting its obligations because it suspected “serious non-compliance”.
AUSTRAC chief executive Brendan Thomas said the watchdog was concerned that Airwallex’s transaction monitoring program was not up to the task of dealing with the risks it faces, and that the firm had “not demonstrated an acceptable understanding” of who its customers are and the reporting required.
He said the agency’s concerns also extend to Airwallex’s capacity to identify and report on suspicious matters.
“We take this action where we suspect serious non-compliance, because we expect businesses to be actively managing their [anti-money laundering and counterterrorism financing] obligations,” Thomas said.
“Strong compliance systems and timely reporting of suspicious activity are essential to disrupting criminal activities and illicit proceeds of crime generated from fraud, scams, illicit tobacco, drug trafficking and payments relating to crimes such as child sexual exploitation.”
Airwallex was contacted for comment.
The auditor conducting the probe will have 180 days to report their findings to AUSTRAC. The scope of the audit will be determined by AUSTRAC, the agency said, but will be run at Airwallex’s expense.
“Effective anti-money laundering controls start at the top. Boards and senior executives must be actively overseeing how money laundering and terrorism financing risks are identified, assessed and managed across their business,” the agency said in a statement.
“AML/CTF is not a back-office function. It requires clear accountability, properly authorised staff who can submit reports and sufficient resourcing to support timely and accurate reporting.”
Airwallex is a payments platform that was founded a decade ago with the purpose of making cross-border transactions faster and easier for small businesses and individuals.
Airwallex was founded by chief executive Jack Zhang with several co-founders in Melbourne about 10 years ago. Since then, the payments start-up has set up dual headquarters in Singapore and San Francisco.
It boasts of allowing customers to make local money transfers to more than 120 countries and processes more than $US235 billion ($345 billion) in payments annually.
Airwallex is backed by major local venture capital firms Airtree Ventures, Square Peg Capital, and Blackbird Ventures. It raised $US330 million ($491.6 million) in December, lifting its valuation to $US8 billion ($12 billion) and becoming one of Australia’s most valuable start-ups in the process.
The company is currently reported to be preparing for a listing on the stockmarket, largely expected to occur in the United States. In an interview with CNBC in 2024, Zhang said the company was aiming to be ready for a public float within the next two years.
But the company has since been the subject of a string of controversies. In early December, Zhang was drawn into a spat on X with the prominent Silicon Valley venture capitalist, Keith Rabois, who accused Airwallex of exposing sensitive American data to the Chinese government.
Zhang denied the allegation and accused Rabois of “circulating inaccurate claims” for the benefit of one of his portfolio companies.
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John Buckley is a CBD columnist for The Sydney Morning Herald and The Age.Connect via email.From our partners
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