The Afterpay Touch Group Ltd (ASX: APT) share price is up a whopping 13% to $36.20 today as investors cheer news that its interim audit report sent to AUSTRAC has not made any recommendations.
Afterpay also did not disclose any findings of non-compliance or breaches of the AML/CTF Act 2006 or other financial services laws.
However, it's worth noting this is only an interim audit report that can take different forms depending on what is agreed with the auditor and regulator.
Afterpay also notes the preliminary audit report "does not provide any recommendations, which will be left to the final report."
More importantly: "Mr Jeans (the auditor) has advised that work is now underway to complete the assessment of, and test implementation and compliance with, the various AML/CTF Programs in place during and after the notice period."
In other words it appears the preliminary audit has not yet tested Afterpay's compliance with the laws, although that does not appear to have put the market off sending the stock to a record high.
Furthermore, the announcement also suggests the auditor will be testing compliance plans and programs put in place "during and after the notice period".
This suggests Afterpay has lifted its compliance game subsequent to the initial AUSTRAC notice in a bid to pass the audit with limited recommendations or findings. Commonly other consultants like PWC can be hired to build AUSTRAC compliance programs for AUSTRAC regulated entities in return for some reasonably chunky fees.
It will then be the job of the AUSTRAC agreed auditor (Mr Helms) to test how Afterpay's specific procedures meet compliance with its obligations under the law.
So while this announcement does not mean Afterpay is out of the AML/CTF woods, it seems likely it'll exit with minimal to no material damage.
