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- The pioneer of the "Buy Now, Pay Later" service has stated that he has not identified any money laundering or terrorist financing activities on his platform, but confirmed that AUSTRAC had raised concerns .
- This revelation comes barely a day after the announcement of its latest figures regarding the retail footprint in the United States, including partnership agreements with iconic Levi's fashion brands, Ray-Ban, O & # 39; Neill and Tarte Cosmetics.
Things were going so well for Afterpay.
The Australian pioneer of the "Buy Now, Pay Later" service announced Wednesday it has signed new partnership agreements with US brands, including Levi's, Ray-Ban, O Neill and Tarte Cosmetics, which represents the total number of US consumers who used the product at 1.5 million across 3,300 retailers.
This announcement saw its course climb on the Australian Securities Exchange, closing up 7.079% to $ 23.90 – the country's best-performing stock market Wednesday.
But, Thursday, the story of the fintech platform is very different.
Afterpay revealed in a statement to the ASX that it has attracted the attention of the Australian Financial Intelligence Agency, AUSTRAC.
"Although Afterpay has not yet identified any money laundering or terrorist financing activities through its systems, Afterpay is currently in dialogue with AUSTRAC about AUSTRAC's issues regarding our AML compliance." / FT, whose outcome remains to be determined. " the statement said.
"As a scheduled part of our existing program, we are in the process of appointing a leading professional services firm to conduct an independent review of the design and operation of our business. [compliance] frame."
Afterpay said it changed its identity verification processes in July 2018 to better comply with Australian anti-money laundering and anti-terrorist financing laws.
The release also confirms Afterpay's intention to launch in the UK under the Clearpay brand, as a result of a "subtle test" – an announcement that has been overshadowed by AUSTRAC's revelation .
AUSTRAC spokesman told Business Insider Australia he was investigating Afterpay.
"AUSTRAC can confirm that it has been working closely with Afterpay for some time on compliance issues related to the fight against money laundering and the financing of terrorism," the spokesman said. word. "Stopping the movement of money towards criminals and terrorists is an essential part of our national security defenses."
The spokesman declined to answer Business Insider Australia's other questions about AUSTRAC's specific concerns.
At the time of writing this report, the Afterpay share price had dropped 1.67% to 23.50 USD on the ASX.
A parliamentary inquiry, which began in October 2018, aimed to search for suppliers of "financial and credit services to Australians at risk of financial hardship," after the Australian Securities and Investment Commission called Afterpay the One of many now, pay later for services under his microscope.
After being questioned by politicians during the investigation, Afterpay claimed that it was not at all a credit provider, but a "budgeting tool" that levied late fees instead of charge interest or account maintenance fees. The consumer advocacy group, Choice, told the panel that "a quarter of Afterpay's income" comes from these late fees.
Although the parliamentary inquiry ultimately avoided introducing strict new rules for Afterpay and its rivals, it also expressed a certain cynicism about the "budget tool" line, particularly with regard to more consumers. vulnerable.
"It seems likely that, as suggested by the vendors, many people are using their products as a budgeting tool," concluded the final report.
"However, it is less likely that 23% of people who pay their instant purchase account with a credit card use this service for budgeting.
"This is certainly not the case as people with multiple payday loans use" buy-now-pay-later "products in the budget."
But Harvard Business School would love the business model.
Afterpay co-founder Nick Molnar was invited to give a lecture to MBA students in April, according to the Australian newspaper.
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