Austrac orders financial crime compliance audit of PayPal Australia

An external audit will look into the company's local operations and its compliance with financial crime laws.
Written by Asha Barbaschow, Contributor

Australia's financial intelligence and regulatory agency, Austrac, has on Tuesday ordered an external audit of PayPal Australia's compliance with financial crime laws.

Austrac said the auditor will examine ongoing concerns in regard to PayPal Australia's compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act), specifically the local operation's International Funds Transfer Instruction reporting obligations.

Under these obligations, regulated entities are required to report the transfer of funds or property to or from Australia.

Austrac said International Funds Transfer Instructions reported by the financial services sector provide it with vital intelligence that enables the regulator and its partners to combat serious crimes, such as child sex exploitation.

See also: Australia's Fintel Alliance combining data to thwart criminal activity

With a 120-day deadline, the auditor will probe PayPal Australia's compliance with its AML/CTF Program obligations, International Funds Transfer Instruction reporting obligations, and record keeping obligations.

"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," Austrac CEO Nicole Rose said.

"PayPal is an important partner in the fight against crime. However, when we suspect non-compliance Austrac will take action to protect the Australian community."

According to Austrac, the outcomes of the audit -- which will be at PayPal's financial expense -- will assist PayPal with its compliance, but the regulator said it will also inform whether any further regulatory action is required.

For 2018, the company's Australian operations produced AU$9.5 million in after-tax profit, with the "rendering of services" seeing PayPal produce AU$594 million in revenue.

The company earns transaction fees from processing transactions for customers. Revenue resulting from a payment processing transaction is recognised once the transaction is complete, PayPal explained in its financial results.

It listed AU$534 million of its AU$594 million revenue as the total cost involved in providing such services for the year.

Globally, PayPal reported revenue of $15.45 billion for 2018.


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