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Trouble Down Under: TikTok Faces AML Probe in Australia Amid Global Scrutiny

Updated: Apr 18

TikTok, the ubiquitous social media juggernaut, has found itself in the crosshairs of a potential Anti-Money Laundering (AML) investigation in Australia, following the exposure of troubling financial irregularities. The saga began with the emergence of an internal memo from TikTok, revealing that HSBC, a major bank, had shuttered several of the company's accounts due to significant deficiencies in its anti-money laundering controls. This revelation sparked concerns among regulators, particularly after Turkish authorities flagged the platform over substantial sums of money flowing through TikTok to a select few user accounts.


Trouble Down Under: TikTok Faces AML Probe in Australia Amid Global Scrutiny

Further complicating matters, Ireland's banking regulators also probed ByteDance, TikTok's parent company, over the movement of millions of dollars out of its HSBC accounts. Initially, ByteDance attributed these transactions to "liquidity management purposes," but subsequent disclosures uncovered that HSBC's account closures stemmed from AML shortcomings within ByteDance's payments division.


In response to mounting pressure, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has been alerted to potential AML breaches by TikTok. Senator James Paterson has urged AUSTRAC to launch a full investigation, citing concerns about the platform's vulnerability to money laundering and its potential impact on national security, particularly in light of allegations linking TikTok to terrorist financing activities.


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Despite persistent accusations, TikTok has vehemently denied any affiliation with the Chinese Communist Party, stressing its independence from Douyin, the Chinese counterpart of the app. A TikTok spokesperson reiterated the company's commitment to compliance with legal obligations and emphasized that it had not received any inquiries from Australian regulators regarding the matter.


While TikTok purportedly implemented tighter compliance measures in Turkey following the 2022 issues, it declined to comment on the situation in Ireland. AUSTRAC, which has made regulating digital businesses involved in fund transfers a top priority, acknowledged receipt of Senator Paterson's letter but refrained from commenting on operational matters.


Amidst its exponential revenue growth, TikTok continues to face scrutiny in various Western nations. In the United States, a proposed bill compelling ByteDance to divest TikTok or face a ban remains stalled in the Senate. However, Australia has yet to pursue similar measures, even as the company undergoes leadership changes at the local level.


As AUSTRAC deliberates on its course of action, Australian law mandates that companies facilitating money transfers must identify and mitigate the risk of their services being exploited for money laundering and criminal activities. This latest development underscores the complexities and challenges faced by digital platforms operating in an increasingly regulated landscape.

By fLEXI tEAM



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