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PayPal to be audited over financial crime concerns

Worldwide online payments system PayPal website. (AAP Image/Mick Tsikas) NO ARCHIVING
Worldwide online payments system PayPal website. (AAP Image/Mick Tsikas) NO ARCHIVING

The financial crime watchdog has ordered PayPal to conduct an external audit over “ongoing concerns” about its compliance with money laundering and counter-terror laws.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is concerned about PayPal’s reporting of funds transferred in and out of the country.

These reports provide the financial crime watchdog with “vital intelligence” that allows the regulator and its partners to tackle “serious crimes” including child sex exploitation, AUSTRAC said in a statement.

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AUSTRAC CEO Nicole Rose said businesses like PayPal, which facilitate payments and transactions for millions of Australian customers, play a “critical role” in helping combat money laundering and preventing money going into the hands of criminals and terrorists.

“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,” she said.

PayPal has been ordered to appoint and pay for an external auditor, and within 120 days (or roughly four months) must report on PaypPal’s compliance with:

  • Anti-Money Laundering/Counter-Terorrism Financing (AML/CTF) Program obligations;

  • International Funds Transfer Instruction (IFTI) reporting obligations; and

  • Record keeping obligations.

The review will let the watchdog know if any “further regulatory action” is needed, AUSTRAC’s statement said.

“We will continue to work closely with PayPal during this process to address any compliance concerns,” said Rose.

PayPal has said it was fully committed to complying with Australian laws.

"Following an internal review, our business in Australia self-disclosed an issue in our reporting system for International Fund Transfer Instructions to AUSTRAC," a PayPal spokesperson said.

"We are working in full co-operation with AUSTRAC to remediate this reporting system issue and to undertake the audit as outlined by AUSTRAC in the time specified.

"There is no impact to our customers, who can continue to use PayPal services as usual."

–with AAP

Note: A previous version of this article suggested that the reason for the audit was due, in part, to concerns around child sex exploitation. AUSTRAC’s concerns relate primarily to PayPal’s reporting obligations. This has now been amended.

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