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Money laundering is an illegal process of making money in huge volumes that is generated via a criminal activity; however, this money appears to have come from a legal source. Across the globe, criminals use several techniques to make money that appears clean. To address money laundering (ML) activities, governments set up certain rules and regulations targeted towards preventing criminals from obtaining funds from illegal sources and representing it as legitimate income. These government efforts are known as anti-money laundering (AML). Money laundering is a serious threat to financial systems and financial institutions, as well as economy and public security.
In this article, we would discuss one ASX listed player - Afterpay Touch Group Limited â that is currently under review by the Australian Transaction Reports and Analysis Centre (AUSTRAC). The company was served a notice by AUSTRAC for assigning an external auditor to conduct an audit related to its AML/CTF compliance.
About Afterpay Touch Group Limited
Afterpay Touch Group Limited (ASX: APT) is a financial technology company, which aims to provide its customer base around the world with an amazing purchasing experience. The company enables retailers to offer a âbuy now, receive now, pay laterâ service. With this service, the end-users are not required to enter into any traditional loan or pay any fees (upfront) or interest to APT.
Stock Information
Since the company got listed on ASX, its shares have given an outstanding return of 1193.33%. The shares continue to deliver decent returns to date. The shares on 8 October 2019 opened at a price of $34.680 and were trading at $34.675 (AEST 01:54 PM), down by 0.702% as compared to its previous closing price. The market cap of Afterpay Touch Group Limited as on 8 October 2019 stood at $8.82 billion with approximately 252.68 million outstanding shares.
AUSTRAC/ASX Enquiry
On 25 September 2019, the company provided an update related to the AML/CTF matters. According to the release, the company has provided the Australian Transaction Reports and Analysis Centre (AUSTRAC) with the confidential interim report of external auditor Mr Neil Jeans. The interim report submitted with AUSTRAC does not cover any recommendations, to be left to the final report.
As per the external auditor, work is under progress targeted towards finalising the evaluation of, and test implementation and compliance with, the several AML/CTF programs, which are in place during and after the notice period.
The company in the announcement again highlighted that APT had not discovered any money laundering or terrorism financing activity that took place through its systems. The company claimed that its systems have many features to prevent money laundering and terrorism financing risk, such as the execution of strict spending limits. The company also clarified that Afterpay is used by its end users for discrete, small value transactions with an average amount of $150. The company supports non-cash transactions and does not allow any international transfer of funds.
Post the release of this announcement, the shares of APT on 25 September 2019 closed at a price of $36, which represented a growth of 13.31%. Late on 25 September 2019, an email was sent to the General Counsel & Company Secretary of APT, Mr Christopher Stevens by ASX related to the increase in the share price. ASX asked the company several questions.
- The first question raised by ASX was targeted towards understanding whether the company was aware of any information which included any information in the Interim Report - the subject of the announcement on 25 September 2019 - that had not been broadcast to the market. The ASX sought to understand whether any such announcement could explain the recent trading in the companyâs securities.
In response, the company clarified that it was not aware of any such information.
- The next question from ASX to APT was to know if APT would like to throw some light on the trading of securities on 25 September 2019.
In response, APT stated media reporting might have influenced the trading in securities on 25 September 2019. APT highlighted that one of the media houses had published that Goldman Sachs had included APT to its âconviction listâ. Goldman Sachs also upgraded Afterpay from âneutralâ to "buy" with a share price target of $42.90. One of the media houses also reported that Thorney Technologies released an update on 25 September 2019, reflecting an "upbeat" view of APT.
- ASX also raised a query to understand whether APT was following the Listing Rules or not, especially Listing Rule 3.1.
In response, APT confirmed that it was following the Listing Rules.
Background
On 13 June 2019, Afterpay Touch Group Limited updated the market that its subsidiary Afterpay Pty Limited had received a notice from AUSTRAC on 12 June 2019, requesting APT to appoint an external auditor as certified by AUSTRAC who would be carrying out the audit process related to its AML/CTF compliance.
The company was issued the notice as per section 162(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Under this act, there are multiple key areas that the external auditor would be required to be focus over a period from 19 January 2015 to date while preparing the report. Once the external auditor has been appointed, a final version of the audit report is required to be lodged with AUSTRAC within 120 days.
On 26 June 2019, the company announced to have appointed a dedicated Sub-Committee charged with assisting as well as reporting to the APT Board with respect to the supervision and management of the outer audit procedure, engaging with AUSTRAC along with other AML/CTF issues. The committee was led by independent Non-Executive Director Elana Rubin.
On 29 July 2019, the company released an announcement, unveiling that AUSTRAC appointed Mr Neil Jeans, out of the three candidates nominated by APT, for undertaking the audit. Mr Jeans is a Melbourne based specialist AML/CTF firm Initialism. The final report is required to be provided by 23 November 2019.
Disclaimer
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
