The Afterpay Touch Group Ltd (ASX: APT) share price has risen by more than 2% in early trade after providing an AUSTRAC update.
Afterpay Touch is the owner of the popular “buy now, pay later” app. As of early 2019, Afterpay had over 4 million registered users worldwide, making it one of Australia’s true technology success stories.
Afterpay’s AUSTRAC News
Afterpay has given three candidates to AUSTRAC regarding who will conduct the external audit.
The Afterpay Board has created a sub-committee which will assist and report to the Afterpay Board about the oversight and management of the external audit process, engaging with AUSTRAC and other Anti-Money Laundering and Counter-Terrorism Financing (AML / CTF) issues.
The new sub-committee will be led by non-executive director Elana Rubin.
Afterpay re-iterated it is open to working with AUSTRAC:
“Afterpay recognises the important work undertaken by AUSTRAC. The company reiterates that it welcomes 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. Afterpay is taking the audit very seriously.”
Despite the creation of the sub-committee, the Afterpay Board will retain ultimate oversight of the AML/CTF compliance.
Afterpay’s Other Announcements
Afterpay said that following from the AUSTRAC notice, it would be in the best interests of shareholders to delay the share purchase plan (SPP) part of the capital raising for regular investors until the company has considered the final audit report and its recommendations.
However, even though Afterpay is delaying the SPP it will still be issued at the lower of $23 or the 5-day average price of Afterpay shares up to the SPP closing date.
The final point that Afterpay announced is that co-founders Anthony Eisen and Nick Molnar are fully committed to the business and are excited by the company’s potential. The two co-founders do not intend to sell any further shares during FY20.
Is Afterpay A Buy?
The Afterpay share price has performed strongly since we first learned of the AUSTRAC notice and the immediate decline at the time.
Competition seems to be rising in the buy now, buy later industry and the payments space, I’m not sure Afterpay is worth a high premium with the current issues and the potential for retailers not being satisfied by the merchant fees that are charged.
I think the growth shares in the free report below could be better priced than Afterpay.
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.