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Australia's Afterpay shares leap after audit finds 'low risk' of money laundering

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Australian buy-now-pay-later company Afterpay Touch Group Ltd on Monday said an external auditor had found it was a "low-risk business" in terms of money laundering and terrorism financing, sending its shares up more than 9 per cent.

[BENGALURU] Australian buy-now-pay-later company Afterpay Touch Group Ltd on Monday said an external auditor had found it was a "low-risk business" in terms of money laundering and terrorism financing, sending its shares up more than 9 per cent.

Australia's financial crime watchdog ordered the company to conduct the independent audit earlier this year amid concerns over non-compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws.

The move caused ripples in a sector that has become a darling of stock analysts due to its global expansion and ability to benefit from online-shopping growth.

The auditor found Afterpay was "now appropriately aligned" to AML/CTF rules, Afterpay said in a filing to the stock exchange. The company reiterated it had not found any money laundering or terrorism-financing activity on its systems.

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The regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), would now consider the auditor's report and determine whether any further action was required, Afterpay said.

AUSTRAC ordered a similar audit of PayPal Holdings Inc in September, flagging concerns that reporting obligations had not been met.

Buy-now-pay-later companies let shoppers purchase products without paying upfront, and without the regulatory hurdle of applying for a credit card or loan, and typically make money by receiving fees from vendors.

Australia's financial sector is under mounting regulatory scrutiny after a series of scandals and revelations of widespread wrongdoing, including massive breaches of AML/CTF rules.

AUSTRAC last week accused the country's second-largest, lender Westpac Banking Corp, of failing to report millions of suspect transactions. 

REUTERS