AUSTRAC has ordered the appointment of an external auditor to Afterpay Pty Ltd (Afterpay) to examine its compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act) and provide a report within 120 days.

UPDATE 14 October 2020: Austrac has announced it will take no further action.

The external auditor will examine Afterpay’s:

• Governance and oversight of decisions related to its AML/CTF framework;
• Identification and verification of customers;
• Suspicious matter reporting obligations;
• AML/CTF program, including the development of its money laundering and terrorism financing risk assessment.

Austrac’s notice to Afterpay says that it has “reasonable grounds to suspect that Afterpay is a reporting entity that has convened and/or is contravening sections 32 and 81 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006”.

Section 32 of the AML/CTF Act requires reporting entities to verify their customers before providing a designated service.

Section 81 prohibits a reporting entity from providing a designated service to a customer without having an AML/CTF program in place.

According to Afterpay’s website:

• a customer does not need to register before their first Afterpay purchase;
• Once their first order is approved, a customer’s Afterpay account is created;
• Afterpay uses a mandatory ID verification process to ensure a customer’s eligibility.