Airwallex faces AUSTRAC AML/CTF scrutiny

With businesses and organisations working towards establishing sound anti-money laundering/counter-terrorism financing (AML/CTF) frameworks, AUSTRAC is continuing to take action against those falling behind.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) has ordered the appointment of an external auditor to assess Airwallex’s capabilities of meeting its AML/CTF obligations.

The appointment comes after concerns of potential non-compliance surfaced about Airwallex, about which AUSTRAC said an external audit would help determine the legitimacy of.

Brendan Thomas, chief executive of AUSTRAC, said external audits were a “critical regulatory tool” to assess serious compliance concerns and to protect the financial system from criminal exploitation.

“We take this action where we suspect serious non-compliance, because we expect businesses to be actively managing their AML/CTF 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.”

The financial crime watchdog revealed it was concerned with Airwallex’s transaction monitoring program as a global platform facilitating the transfer of funds to multiple jurisdictions.

It was alleged that, possibly, Airwallex's transaction monitoring program was not attuned to the full range of risks it faced, and the company was not demonstrating an acceptable understanding of its customers and what reporting was required.

Thomson added that AUSTRAC was also concerned with how well Airwallex identified and reported on suspicious matters and the effective oversight of the important obligations.

It was noted that the auditor was appointed under section 162 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and was set to examine whether the business was complying with key AML/CTF requirements.

Such requirements included maintaining and complying with an AML/CTF program, operating an ongoing customer due diligence program, and meeting suspicious matter reporting obligations.

Thomson said the scope of the audit was determined by AUSTRAC and would be conducted at Airwallex’s expense, with the outcomes assumed to help the financial platform comply with AML/CTF obligations and inform AUSTRAC if further regulatory action was required.

“Effective anti-money laundering controls start at the top. Boards and senior executives must be actively overseeing how money laundering and terrorism risks are identified, assessed and managed across their business.”

“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.”