Investors like Airwallex because its vision is sweeping: rewrite the rules of global payments and build the new rails on which they will travel. The company recently raised yet another US$100 million at a valuation of US$2.6 billion. It will use the funds to expand just about everywhere it can: Australia, North America, Europe and Asia. Move over SWIFT.
Before it snatches away SWIFT’s crown, Airwallex may want to consider investing a bit more in compliance. An eye-opening report by The Sydney Morning Herald and The Age found that National Australia Bank (NAB) cancelled services to Airwallex over fears that the company’s anti-money laundering controls were inadequate. NAB reportedly identified multiple red flags, including suspicious transactions patterns and customers, as well as the fact that Airwallex’s compliance chief abruptly stepped down. NAB still provides payroll and rental payments to Airwallex’s Australian entity, but not customer transactions.
Meanwhile, Citibank declined Airwallex’s application for banking services since the firm "did not meet the bank’s risk criteria." Citi was reportedly worried that Airwallex sought to do business with customers in countries under government sanctions. Airwallex has unsurprisingly denied those allegations.
Unfortunately for Airwallex, The Age and Sydney Morning Herald spoke with more than 20 former employees. It will be hard to dismiss everything those people said as the rants of disgruntled ex-colleagues. Below and behold, the former employees described “a growth at all costs” strategy that focuses on customer acquisition and retention, with due diligence not a top priority.
Once again, Airwallex rejects the allegations. A spokeswoman for the firm said that “it does not represent the way we conduct our business.”
Overall, Airwallex has about 40 global banking partners, including ANZ Bank, which has provided transactional services to the company since 2017. Its venture capital arm ANZi Ventures has also made two widely reported investments in Airwallex.
Now that they know NAB and Citibank found compliance deficiencies in Airwallex, it will be interesting to see if the payments unicorn’s other banking partners do some additional due diligence to make sure nothing is awry. We may soon find out if the issues NAB and Citibank identified are isolated incidents or part of a larger problem.