AUSTRAC Orders Special Audit of Airwallex What It Signals for Risk Controls

Investors Summary 

• AUSTRAC has ordered Airwallex to undergo a special external audit as part of an investigation into potential compliance failures.
• The auditor, appointed under section 162 of the Anti Money Laundering and Counter Terrorism Financing Act 2006, will test whether Airwallex is meeting key obligations including an AML and CTF program.
• For investors, the audit creates an overhang because weaknesses in monitoring can make payments, which could impact Airwallex access to capital markets.

When the Regulator Steps In Payments Risk Moves to the Forefront for Airwallex

You may have seen the recent headlines on Airwallex. AUSTRAC, Australia’s financial crime regulator, has ordered the company to undertake a special external audit as part of an investigation into suspected anti money laundering and counter terrorism financing compliance issues. Here is a short, quick summary of the situation.

Media reports suggest the regulator’s concern is whether Airwallex’s transaction monitoring has been strong enough for the payments it processes, including scrutiny around potential links to online child sexual abuse activity. At this stage, the key point for investors is not the headline itself, but what it implies about the regulator’s level of confidence in the current controls.

Payments businesses sit at the centre of huge volumes of sensitive transaction data. That data is stored within systems and data centres, and depending on how the platform is built, records can sit across different environments and jurisdictions. When regulators step in, they will want clear evidence that monitoring, escalation, and reporting processes are working as intended, end to end.

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Transaction Monitoring Under Review, What could happen next?

The fact AUSTRAC has required an external audit means they are suspicious. Regulators typically take that step when they believe there is enough cause to test systems and governance in detail, and to determine whether further action may be warranted.

AUSTRAC Chief Executive Officer Brendan Thomas has framed external audits as a critical regulatory tool for assessing serious compliance concerns and protecting the financial system from criminal exploitation.

Under section 162 of the Anti Money Laundering and Counter Terrorism Financing Act 2006, the appointed auditor will review whether Airwallex is meeting core AML and CTF obligations. That includes maintaining an AML and CTF program and operating in line with it, running ongoing customer due diligence, and meeting suspicious matter reporting requirements.

The takeaway is that these are not box ticking items. Payments can be easier to exploit when monitoring is not tight, particularly if a business does not have clean access to data, strong internal controls, and clear escalation processes. If this does escalate for Airwallex, this could be start to a big set back especially access to capital markets.