External audit into financial crime could hurt PayPal' Australia results

PayPal Australia could take a financial hit after the completion of an external audit into the company's compliance with financial crime laws.

Australia’s financial intelligence and regulatory agency, Austrac has ordered that an external audit needs to be carried out to examine ongoing concerns about PayPal Australia's compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the AML/CTF Act).

The external auditor is currently due to issue a final report at the end of August 2020. Specifically, the audit is focused on the local operation's International Funds Transfer Instruction reporting obligations.

For 2019, the company's Australian operations produced AUD 7.26 million net profit after-tax, down from 2018’s AUD 9.5 million. Meanwhile, revenue saw a slight bump to AUD 677 million from the AUD 594 million reported in 2018.

Income tax expense was AUD 10.7 million, more than double the same period in 2018 that had recorded AUD 4 million, while income tax paid was AUD 6.72 million, an improvement on last year's AUD 1.64 million.

However, PayPal Australia said its income tax could potentially be adjusted once a new Bilateral Advanced Price Agreement (BAPA) between PayPal, the Australian Tax Office, and the Inland Revenue Authority of Singapore is reached, according to ZDnet.