September 25, 2019 / 12:44 AM / 3 months ago

UPDATE 1-Australia's Afterpay submits external audit report on money laundering concerns

(Adds company comments, PayPal audit, background, shares)

Sept 25 (Reuters) - Afterpay Touch Group Ltd on Wednesday said it has provided an external auditor’s interim report to Australia’s financial crime watchdog following suspected non-compliance with laws on money-laundering and counter-terrorism financing.

The buy-now-pay-later company also reiterated that it has not identified any money laundering or terrorism financing activity in its systems to date.

In June, AUSTRAC told Afterpay to hire an external auditor to examine compliance concerns, causing ripples in a sector that has become a darling of stock analysts due to its global expansion and ability to benefit from online shopping growth.

The government agency ordered the report after it found “reasonable grounds to suspect non-compliance” with anti-money-laundering and counter-terrorism financing laws.

On Tuesday, AUSTRAC ordered an audit of PayPal Holdings Inc with regards to similar laws, flagging concerns that reporting obligations had not been met. PayPal said its Australian unit had reported itself after an internal review.

In a statement on Wednesday, Afterpay said the confidential interim report by external auditor Neil Jeans does not provide any recommendations, which will be left to the final report.

AUSTRAC has ordered a final report be submitted by Nov. 23.

“Afterpay’s systems include several features that help to control our money laundering and terrorism financing risk, including the implementation of strict spending limits,” the firm said.

Following Wednesday’s announcement, Afterpay’s share price jumped 9.5% in early trade to a record high.

Reporting by Rashmi Ashok in Bengaluru; Editing by Clarence Fernandez and Christopher Cushing

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