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The Australian Transaction Reports and Analysis Centre (AUSTRAC) has accepted undertakings from PayPal to end an investigation into its anti-money laundering and counter-terrorism financing (AML/CTF) controls.
The so-called enforceable undertaking comes after AUSTRAC had raised concerns about PayPal’s systems, controls and governance in relation to its international fund transfer instructions (IFTI) reporting in Australia.
AUSTRAC launched the investigation in December 2020 after PayPal identified issues with how it complied with certain IFTI reporting obligations.
According to the agency, the payments firm has made significant steps to strengthen its AML/CTF programme since then.
These included work to uplift PayPal’s technical capabilities, significant investments in work programmes and independent audits to mature the governance, oversight and risk management of its business in Australia.
The fintech will now carry out an assurance action plan, which includes setting up the necessary systems and controls that ensure its board is aware of material issues affecting its AML/CTF obligations, and addressing weaknesses found in its IFTI reporting.
Under the action plan, PayPal will also have to prove to AUSTRAC that its outsourced functions comply with its AML/CTF programme and that its codes used to comply with AML/CTF obligations are monitored regularly.
AUSTRAC said it acknowledges the work done by PayPal and accepted the undertakings.
Nicole Rose, AUSTRAC CEO, said these undertakings will ensure PayPal’s ongoing compliance with its AML/CTF obligations.
The agency did not issue a fine.
“Every business with obligations under the AML/CTF Act must have robust systems in place to ensure they meet their AML/CTF requirements and play their part in protecting Australia’s financial system from criminal exploitation,” Rose said.
“PayPal has cooperated with AUSTRAC throughout the course of our regulatory enquiries demonstrating its commitment to maturing its AML/CTF compliance arrangements.”
Rose said AUSTRAC will continue to work with PayPal “to ensure that the changes and enhancements made to PayPal’s AML/CTF programme are appropriate and sustainable and that the complex and technical work undertaken by PayPal has met its objectives in the real-time operational environment”.
A PayPal Australia spokesperson said “PayPal Australia remains steadfast in its commitment to the highest standards of regulatory compliance”.
The spokesperson stressed that PayPal Australia self-identified the reporting obligation issue to AUSTRAC and has fully cooperated with AUSTRAC throughout its investigation.
“PayPal Australia has always and will continue to play an active role in helping protect the Australian community online, including through providing consumer education, assisting law enforcement and as a long-term active contributor to the Fintel Alliance.”
