Afterpay share price lower after AUSTRAC orders external audit

The Afterpay Touch Group Ltd (ASX:APT) share price has dropped lower on Thursday after AUSTRAC ordered an external audit…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Touch Group Ltd (ASX: APT) share price has come under pressure on Thursday after providing an update in relation to AUSTRAC and its Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) program.

In morning trade the payments company's shares are down 8.5% to $23.45.

What was in the update?

This morning Afterpay Touch revealed that its subsidiary, Afterpay Pty Limited, received a notice from AUSTRAC after 5pm on June 12 requiring it to appoint an AUSTRAC-authorised external auditor to carry out an audit in respect of its AML/CTF compliance.

The release explains that the notice, which has been issued in accordance with section 162(2) of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), sets out a number of key areas that the external auditor is to focus on and covers the period from January 19 2015 to date.

A final version of the audit report is required to be provided to AUSTRAC within 120 days of the external auditor's appointment.

Afterpay's response.

Afterpay reiterated that it is committed to meeting the high expectations of its customers and retail partners. It also advised that its millions of customers use the service to budget for discrete, small value ($148 average), non-cash transactions.

In light of this, it has welcomed the opportunity to continue to work closely and constructively with AUSTRAC and "will approach this formal process as an opportunity to ensure that our AML/CTF compliance is robust."

It added: "We have proactively engaged with AUSTRAC on our AML/CTF compliance over a number of months, including recent engagement about our intention to conduct an independent review as part of our AML/CTF program. We recognise that Buy Now Pay Later is a new and maturing sector not only for our customers, but also for regulators, and we will continue to work closely with AUSTRAC to develop a leading compliance regime specific to our business in a transparent and cooperative manner."

Management also pointed out that its business model has several features that help to control its money laundering and terrorism financing risk, including the implementation of strict spending limits (up to a maximum of $1,500 per transaction).

Furthermore, the company has undertaken various measures to strengthen its AML/CTF framework including in focus areas identified in the notice and continues to invest in further AML/CTF compliance enhancements. It does not expect any impact to arise on the way customers and merchants currently use the Afterpay service.

It isn't just Afterpay Touch's shares that have come under pressure because of the news. The shares of fellow buy now, pay later providers FlexiGroup Limited (ASX: FXL), Splitit Ltd (ASX: SPT), and Zip Co Ltd (ASX: Z1P) have all dropped lower this morning.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Share Fallers

Why Aurelia Metals, Australian Ethical, Lifestyle Communities, and Regis Resources shares are falling

These shares are falling heavily with the market. But why?

Read more »

senior couple disappointed and sad at their financial situation
Share Fallers

Down 26% in 5 days, why is this ASX 200 real estate stock crashing again today?

Investors are displeased with the latest announcement from the ASX 200 real estate stock.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Alumina, Domino's, DroneShield, and WiseTech shares are sinking today

These shares are having a tough session on Thursday. Why are investors selling their shares?

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Deep Yellow, DroneShield, Mount Gibson Iron, and Praemium shares are falling

These shares aren't having a good time on hump day. What's going on?

Read more »

woman holding man's hand as he falls representing ups and downs of ASX investing
Share Fallers

What's next for Droneshield stock after Tuesday's 22% drop

DroneShield shares crashed yesterday. What's next for the company?

Read more »

drone stuck in a tree representing crashing Aerometrix share price
Share Fallers

Big ASX news! DroneShield share price crashes 31%

DroneShield shares are enduring a stunning fall from grace today.

Read more »

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Share Fallers

Why Champion Iron, Core Lithium, Encounter Resources, and Rio Tinto shares are dropping

These shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Real Estate Shares

Why this ASX 200 real estate share is plunging 17% today

The ASX 200 real estate share is taking a beating on Monday. But why?

Read more »