Airwallex under AUSTRAC scrutiny: What you need to know

They're one of the largest, most valuable Australian-founded financial technology (fintech) companies you may have never heard of.

That company is Airwallex. Started in Melbourne in 2015, Airwallex has become a major player in the international payments space for businesses.

It's also one of Australia's few unicorns (a privately-held startup valued at more than over US$1 billion) and has attracted billions of dollars in capital over the years.

Recently, the company has been getting attention beyond its customers and investors. It's caught the eye of the Australian Transaction Reports and Analysis Centre (AUSTRAC).

So why has Airwallex attracted AUSTRAC's attention? And what could the development mean for the company going forward? Here's an overview to get you up to speed.

What does Airwallex do?

Airwallex - which was founded by Xijing Dai, Max Li, Lucy Liu, Ki-lok Wong and Jack Zhang - came to life as a platform designed to lower costs for businesses making cross-border payments.

In the decade since its founding, Airwallex has expanded its offerings to include everything from international payments and multi-currency accounts to corporate cards and invoice solutions.

In fact, it is reportedly used by more than 200,000 companies worldwide and processes more than US$235 billion ($333 billion) worth of payments each year.

While it was founded in Melbourne, Airwallex has been headquartered in Singapore since 2023, though it recently announced that it would begin operating a second, joint global headquarters in San Francisco.

Despite moving its headquarters, the company still operates in Australia and holds an Australian Financial Services Licence (AFSL).

Why is Airwallex under scrutiny from AUSTRAC?

Like any large firm, Airwallex has had its share of controversies.

Last year it faced allegations (which the company has denied) that it was providing sensitive data from users in the United States to government officials in China.

More recently, Airwallex has found itself in hot water with regulator AUSTRAC.

In a statement last week, AUSTRAC announced that it had ordered the appointment of an external auditor to assess whether Airwallex is complying with its anti-money laundering and counter-terrorism financing obligations.

Brendan Thomas, AUSTRAC chief executive, noted that the regulator takes action like this in situations where "serious non-compliance" is suspected.

"Strong compliance systems and timely reporting of suspicious activity are essential to disrupting criminal activities and illicit proceeds of crime generated from fraud, scams, illicit tobacco, drug trafficking and payments relating to crimes such as child sexual exploitation.

"As a global payment platform that facilitates the transfer of funds to multiple jurisdictions, AUSTRAC is concerned with Airwallex's transaction monitoring program has not been attuned to the full range of risks it faces and that the company hasn't demonstrated an acceptable understanding of who its customers are and what reporting may be required."

In a statement of its own, Airwallex maintained that it has zero tolerance for financial crime or illicit activity on its platform and that it will co-operate fully with AUSTRAC's request.

Is an Airwallex IPO now on the backburner?

Over the past decade, Airwallex has undertaken seven funding rounds, bringing in more than US$1.5 billion ($2.1 billion) in venture capital, including from local firms like AirTree, Blackbird and Square Peg.

The question that has attracted plenty of speculation though is if Airwallex - which is reportedly valued at US$8 billion ($11.4 billion) - is going to pursue an initial public offering (IPO).

In a 2024 interview with CNBC, chief executive Jack Zhang revealed that the company was looking towards being 'IPO ready' in the next two years.

But in a LinkedIn post made a day after the AUSTRAC statement came out, Zhang wrote that an IPO in 2026 or 2027 had never been in the works.

"Assumptions get repeated until they're treated as truth. For example, we've seen reporting we have suspended our IPO this year - despite the fact that we never planned to do an IPO this year, or even next year."

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