PayPal has promised the Australian Transaction Reports and Analysis Centre (AUSTRAC) to improve its act on anti-money laundering and counter-terrorism financing.
"An assessment of PayPal Australia revealed deficiencies in the
systems PayPal had in place to assess and manage its money laundering
and terrorism financing risk," AUSTRAC CEO John Schmidt
said in a statement.
The centre's concerns based around PayPal's assessment of how
likely it was that new customers, whose account balances were less
than $1000, were involved in money laundering or terrorist
The concern was that PayPal wasn't compliant with the
Anti-Money Laundering and Counter-Terrorism Financing Act
2006, which says that reporting entities should assess the risk
of their customers, products and services. Following a declaration
issued by AUSTRAC on 3 October, PayPal was required to present the
centre with an enforceable undertaking — a written
enforceable in a court.
The undertaking, presented yesterday, promised to strengthen PayPal's
existing systems and controls to comply with risk assessment
requirements. The company will also appoint an independent expert to review
its compliance and prepare a plan to remedy deficiencies.
PayPal said that it not only had been running a global
anti-money laundering and counter terrorism financing program since
its founding 10 years ago, but had also spent US$13 million to
enhance it, including changes for Australian requirements, over the
last two years. It has introduced additional registration data
collection, electronic identity verification for customers and
additional reporting to AUSTRAC, to meet requirements and would
work with AUSTRAC to meet others, the company said.
"We consider the [legislation] extremely important and
take all of our compliance obligations seriously. We are confident
we will meet AUSTRAC's requirements," PayPal Australia managing
director Frerk-Malte Feller said in a statement.
"Compliance with the Act's risk assessment requirements is
crucial in Australia's fight against money laundering and terrorism
financing. The acceptance of this undertaking is a clear sign to
industry that they must have robust systems and controls in place
to manage and mitigate the risks their business may face," AUSTRAC's Schmidt said.