AUSTRAC orders audit of PayPal Australia amid AML law compliance concerns

Maria Nikolova

The concerns related to PayPal Australia’s compliance with its International Funds Transfer Instruction reporting obligations, which require regulated entities to report the transfer of funds or property to or from Australia.

Regulatory concerns about PayPal Australia’s compliance with anti-money laundering laws have triggered an action by AUSTRAC. The agency today announces that it has ordered the appointment of an external auditor to examine ongoing concerns in regard to PayPal Australia’s compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. These concerns relate to the company’s compliance with its International Funds Transfer Instruction reporting obligations, which require regulated entities to report the transfer of funds or property to or from Australia.

AUSTRAC explains that International Funds Transfer Instructions reported by the financial services sector provide it with intelligence that enables ot and its partners to combat serious crimes. AUSTRAC Chief Executive Officer, Nicole Rose PSM said the AML/CTF regime is in place to protect businesses, the financial system and the Australian community from criminal threats.

“Regulated businesses like PayPal Australia, who facilitate payments and transactions for millions of Australian customers every year, play a critical role in helping AUSTRAC and our law enforcement partners stop the movement of money to criminals and terrorists,” Ms Rose said.

The external auditor will have to report to AUSTRAC within 120 days of being appointed and will examine PayPal Australia’s compliance with its:

  • AML/CTF Program obligations;
  • International Funds Transfer Instruction (IFTI) reporting obligations;
  • Record keeping obligations.

The results of the audit will assist PayPal with its compliance, but also inform AUSTRAC whether any further regulatory action is required. The extent of the auditor’s check is determined by AUSTRAC and the expenses will be covered by PayPal Australia.

AUSTRAC notes that it has a range of enforcement powers available, which include:

  • issuing infringement notices;
  • issuing remedial directions, which require a reporting entity to take specified action to ensure compliance;
  • accepting enforceable undertakings detailing the specific actions a reporting entity will commence or cease in order to comply with the AML/CTF Act;
  • seeking injunctions and/or civil penalty orders in the Federal Court;
  • referring a matter to the Commonwealth Director of Public Prosecution for possible criminal prosecution.

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