Afterpay halts share plan

Capital raising on hold until AUSTRAC audit ends

AFTERPAY Touch has deferred and could cancel a $30 million share purchase plan until the completion of a regulator-mandated probe into its anti-money laundering and terrorism financing compliance.

The buy now, pay later firm yesterday said it had given AUSTRAC details of three external candidates to conduct an audit ordered by the federal financial intelligence agency.

It added that it would defer the share purchase plan component of a $330 million capital raising until it had considered any recommendations stemming from the audit.

The company has also set up a subcommittee – led by independent director Elana Rubin – to manage the external audit and liaise with AUSTRAC.

“The board reserves the right to not proceed with the SPP if it considers it inappropriate to do so,” Afterpay said in a statement to the ASX.

Co-founders Anthony Eisen (pictured) and Nick Molnar, who remain Afterpay’s largest shareholders with a 22.5 per cent holding each, have also promised not to sell any shares at least until FY21.

Australia’s financial crime watchdog began talks with Afterpay about compliance in August and told the company in April that it was considering giving it notice to appoint an external auditor.

The week before Afterpay announced the capital raising, AUSTRAC informed Afterpay that it had yet to come to a decision about the audit order.

Then two weeks ago Afterpay was told to hire an external auditor to probe its compliance with anti-money laundering and terrorism financing laws, with AUSTRAC threatening unspecified action if the firm wasn’t taking it seriously.

AUSTRAC’s concerns specifically revolve around the identification and verification of customers, its suspicious matter reporting obligations and its governance and oversight of decisions related to anti-money laundering and counter-terrorism financing framework.

Buy now, pay later companies such as Afterpay allow shoppers to purchase products without paying upfront, and without the regulatory hurdle of applying for a credit card or loan.

They make money by receiving fees from vendors and from late payment charges.