Afterpay founders vow to stand by the company amid AUSTRAC audit
Written on the 26 June 2019 by David Simmons
The founders of buy-now pay-later fintech Afterpay Touch Group (ASX: APT) have voiced their commitment to the business, vowing to hold onto their shares.
Nick Molnar (pictured right) and Anthony Eisen (left), co-founders of the company, recently cashed out of the company to the tune of $103.5 million, just three trading days after the fintech announced it was subject to an AUSTRAC audit.
The very next day after Molnar and Eisen cashed out the group confirmed that AUSTRAC was auditing the group for potential breaches of anti-money laundering legislation.
This quick attempt to bail out of Afterpay with $103 million in hand has not gone unnoticed, and the co-founders have now confirmed their commitment to the business.
In a statement released to the ASX this morning, relating to the ongoing AUSTRAC audit, the co-founders say they "remain fully committed to the business and remain as excited as ever by the potential to build an Australian listed global technology company that is focused on delivering a customer-centric and trusted service to a global audience."
"Anthony and Nick do not intend to sell any further shares during the next financial year (FY2020)," says Afterpay.
As founders of Afterpay, the pair are subject to a voluntary escrow, meaning they can only sell their shares in the business periodically.
The next available date for Molnar and Eisen to cash out will be on the 18th October, just six days before the report of Afterpay's external auditor to AUSTRAC is released. Cashing out then would likely raise a red flag or two for the company's shareholders.
The sections of the Anti-Money Laundering and Counter Terrorism Financing Act that Afterpay is suspected to be in breach of carry a maximum penalty of $21 million each.
But as we have seen with the historic Commonwealth Bank (ASX: CBA) AUSTRAC decision, it is possible to hit a $700 million penalty.
As reported by the Australian Financial Review it has been proven possible to launder money by using Afterpay. All one needs is a prepaid VISA card, a prepaid sim card and a disposable email address.
In addition to today's announcements the company has decided to delay a $30 million share purchase plan until the final report from the AUSTRAC audit is received.
This is not the first time Afterpay has come under scrutiny as regulators and the BNPL sector come to grips with one another. Last year the Australian Securities and Investments Commission (ASIC) opened up an investigation into whether companies in the industry were preying on vulnerable people with low incomes.
At the time Afterpay offered its support for ASIC's push to extend its intervention powers into BNPL services.
In February, Afterpay escaped unscathed by a Senate Inquiry into BNPL services, which highlighted the need for an independent regulatory framework for these payment systems that are patently different to traditional credit products.
Shares in Afterpay are up 2.14 per cent to $26.27 per share at 11am AEST.
Business News Australia
Author: David Simmons