The Afterpay Touch Group Ltd (ASX: APT) share price is down 6% after providing an update about the AUSTRAC issues.
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of early 2019, Afterpay had over 3.5 million registered users worldwide, making it one of Australia’s true technology success stories.
Afterpay’s AUSTRAC Update
As a reminder, Afterpay is working with AUSTRAC about the company’s ‘Anti-Money Laundering / Counter Terrorism Financing (AML/CTF)’ program.
AUSTRAC sent a notice requiring Afterpay to appoint an external auditor to audit the AML / CTF compliance. Afterpay said it was informed of AUSTRAC’s intention to issue this notice after 5pm on 12 June 2019.
The auditor will be looking at the period from January 2015 to date, so it will be looking at most of Afterpay’s operational existence. A final version of the audit report is required to be provided to AUSTRAC within 120 days of the external auditor’s appointment.
Afterpay said its business model has several features that help to control the money laundering and terrorism financing risk, including the implementation of strict spending limits of up to $1,500 per transaction.
The buy now, pay later company said it has undertaken various measures to strengthen its AML / CTF framework including in the focus areas identified in the AUSTRAC notice and it’s investing in further compliance enhancements. However, Afterpay believes it won’t impact the way customers and merchants use the Afterpay service.
Other than what Afterpay could disclose, the company “does not currently have any material information which is in addition to the disclosures made in the investor presentation released to ASX on 11 June 2019 and the risk factor regarding AML / CTF laws.”
Afterpay Share Price Reaction
The Afterpay share price is down 6% in early reaction to this update. The regulator isn’t messing about and seems to want to get on top of any issues that are identified.
Regulations can sometimes increase costs for businesses and can also lead to less activity or slower growth. That’s why I would rather invest in the ASX growth shares in the free report below.
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