AUSTRAC has directed payment platform, MHITS Limited, to appoint an external auditor to assess whether it is meeting its anti-money laundering and counter-terrorism financing (AML/CTF) obligations.
The appointment follows further supervisory work in relation to last year's payment platforms campaign, where AUSTRAC directed WorldRemit and Airwallex to appoint an auditor and issued letters of concern to four other payment platforms, asking them to address serious deficiencies identified during the campaign.
AUSTRAC also sent a letter putting the entire sector on notice to fix serious compliance failures, particularly when it comes to managing the risks of customers using payment businesses to send funds offshore to purchase child sexual exploitation material.
AUSTRAC Chief Executive Officer, Brendan Thomas, said AUSTRAC expects businesses to be actively managing their AML/CTF obligations.
"Our supervisory campaign found payments that are high risk for child sexual exploitation were flowing through online payment platforms, but many businesses were failing to identify and manage the risks, report SMRs or exit high‑risk customers despite the clear warning signs," Mr Thomas said.
"Strong risk management and compliance systems and timely reporting of suspicious matters are essential to disrupting criminal activities and that is what we expect to see in this sector."
"As a payment platform that facilitates the transfer of funds to multiple jurisdictions, AUSTRAC is concerned that MHITS Limited transaction monitoring program is not attuned to the full range of risks it faces."
The auditor must report their findings to AUSTRAC within 180 days of appointment. The scope of the audit is determined by AUSTRAC and will be conducted at MHITS Limited expense.
The outcomes of the audit will assist MHITS Limited to comply with anti-money laundering and counter-terrorism financing obligations and inform AUSTRAC whether any further regulatory action is required.
"I have a simple message for businesses operating in the cross-border payments space: you are on the frontline when it comes to moving funds linked to these horrific crimes, and your actions matter."
"Don't wait for us to knock on your door to get your house in order. You must be able to identify and manage these risks - and that may also mean stopping transactions or the customers trying to make them.
"While some business have work do, we're seeing a marked increase in SMRs across the payment platforms sector.
"In fact, reports of suspected child sexual exploitation have increased by 264%.
"That means people involved in this appalling criminal activity are far more likely to be detected. The likelihood of investigation has increased exponentially."
View a copy of the notice issued to MHITS Limited.
