Australian Watchdog Orders Audit of Paypal for Lapses in Money Transfers

September 25, 2019 | FinTech, Regulations

Austrac, the Australian financial intelligence agency, and watchdog ordered an audit into PayPal’s international money transfers.

Austrac suspects that Paypal had not met reporting obligations regarding anti-money laundering and counter-terrorism financing laws. An external auditor will conduct Austrac’s audit of Paypal and report to Austrac within 120 days. However, Paypal will pay for the audit.

The watchdog suspects that child sex rings might have misused Paypal’s international funds’ transfer for child sex exploitation.

Austrac’s audit of Paypal triggered by self-disclosure

According to AUSTRAC, online child abuse material can be ordered repeatedly from Australia to areas such as the Philippines.

Criminals put through these transactions in small amounts and quite often.“Paypal, unfortunately, is one of the areas that they can use to do that,” said AUSTRAC chief executive Nicole Rose.

However, Paypal refuted the regulator’s comments. It said it had self-disclosed an issue with its transfer system.

Therefore, the discovery of child sex exploitation connections had not triggered Austrac’s audit of Paypal.

“We are working in full cooperation with AUSTRAC to remediate this reporting system issue and to undertake the audit,” Paypal said. “PayPal has a long track record working with global law enforcement agencies to combat child exploitation proactively.”

However, further action by Austrac, if any, will depend upon the report from the external auditor.

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