$12 billion fintech startup probed over anti-money laundering compliance
Australia-based payments startup Airwallex is facing an audit by the country’s financial crimes agency AUSTRAC over suspected failure to comply with money laundering and counter-terrorism financing laws.
AUSTRAC said on Thursday it had ordered the appointment of an external auditor to assess whether the $12 billion fintech startup was meeting its obligations due to suspicions of “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 faced and said the firm had “not demonstrated an acceptable understanding” of who its customers were and the reporting required.
He said the agency’s concerns also include Airwallex’s capacity to detect and report suspicious matters.
“We take this action where we suspect serious non-compliance because we expect businesses to actively manage their situations. [anti-money laundering and counterterrorism financing] obligations,” Thomas said.
“Strong compliance systems and timely reporting of suspicious activity are essential to prevent criminal activity and illicit proceeds of crime from payments related to crimes such as fraud, fraud, illicit tobacco, drug trafficking and child sexual exploitation.”
Airwallex has been contacted for comment.
The investigating auditor will have 180 days to report their findings to AUSTRAC. The scope of the audit will be determined by AUSTRAC but will be conducted at Airwallex’s expense, the agency said.
“Effective anti-money laundering controls start at the top. Boards of directors and senior executives must actively monitor how money laundering and terrorist financing risks are identified, assessed and managed in their businesses,” the organization said in a statement.
“AML/CTF is not a back-office function. It requires clear accountability, appropriately authorized personnel who can submit reports, and adequate resources to support timely and accurate reporting.”
Airwallex is a payment platform founded a decade ago to make cross-border transactions faster and easier for small businesses and individuals.
Airwallex was founded in Melbourne about 10 years ago by CEO Jack Zhang and several co-founders. Since then, the payments start-up has set up dual headquarters in Singapore and San Francisco.
It boasts that it allows customers to transfer local money to more than 120 countries, processing more than US$235 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 US$330 million ($491.6 million) in December, pushing its valuation to US$8 billion ($12 billion), becoming one of Australia’s most valuable start-ups in the process.
The company is reportedly currently preparing to list on the stock market, which is expected to take place largely in the United States. In an interview with CNBC in 2024, Zhang said the company aims to be ready for an IPO within the next two years.
However, the company has been the subject of a number of controversies since then. In early December, Zhang got into an argument over X with 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 “spreading false claims” to benefit one of his portfolio companies.
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John Buckley is the CBD columnist for The Sydney Morning Herald and The Age.Connect via email.
