Police have frozen $US18 million ($26 million) of Airwallex’s funds after the Australian fintech was involved in alleged fraud in Hong Kong.
Airwallex, which became one of Australia’s newest “unicorn” companies in March when it tapped a valuation of $US1 billion ($1.4 billion), is now fighting to clear its name and get the funds released.
Airwallex enables customers to create international bank accounts instantly, access interbank exchange rates and send money through local and international clearing networks to more than 130 countries.
A spokesperson for Airwallex said it is an “innocent third party” and is working with police.
The Hong Kong police Organised and Serious Crimes Ordinance froze the funds after Airwallex remitted $US18.2 million to the bank accounts of two of its customers, Rong Tong Sihai Import and Export Trading Co and Zhong Liang Trading Co.
The funds flowed through Airwallex after Uruguayan company Ciklus was allegedly defrauded.
The incident has had no impact on the viability or operations of our business.Airwallex spokesperson
Rong Tong and Zhong Liang instructed Airwallex to transfer the funds to the accounts of other third-party individuals or companies.
In September Hong Kong police issued a “no-consent letter” to Airwallex’s bank Standard Chartered Hong Kong, and ordered it to freeze the money in the fintech’s bank accounts.
A spokesperson for Airwallex said all the money had already been transferred to third parties and said no-consent letters were “not uncommon” in banking transactions.
The spokesperson said the fintech had conducted proper “know your customer” procedures and due diligence on the two companies in accordance with the law and was not involved in or aware of the alleged fraud.
The Australian company has been asking the Hong Kong police to unfreeze the funds since June, without success.
It has now applied to Hong Kong’s High Court for judicial review of the freezing orders, arguing the Hong Kong police violated private property protection principles.
A spokesperson for Airwallex said the frozen assets relate to an “isolated case” in Hong Kong and had no impact on daily operations in any of Airwallex’s offices, including Australia.
“Since being informed of the fraud, we have been co-operating and assisting the police in their investigation of the matter and are in frequent discussions with the police regarding the lifting of the letter of no-consent,” the spokesperson said. “Airwallex is an innocent third party. The incident has had no impact on the viability or operations of our business.”
Airwallex moved its headquarters from Melbourne to Hong Kong earlier this year but still retains 90 staff in its Melbourne office and employs more than 400 employees in nine offices globally.
The fintech was started in 2015 by former Melbourne University classmates Jack Zhang, Max Li, Xijing Dai, Ki-lok Wong and Lucy Liu.
Earlier this year, Airwallex became the quickest company in Australia to reach unicorn status after raising more than $US204 million from international and local venture capital firms including DTS Capital, Sequoia Capital China, Tencent, Hillhouse Capital, Gobi Partners, Horizons Ventures and SquarePeg Capital.
Despite its valuation, AirWallex’s reported revenues are modest. In the most recent financial records filed with the regulator for the year ending June 30, 2017, Airwallex reported revenue of $14,803 and a loss of $806,195.
The allegations involving Airwallex follow claims last month that Westpac breached money laundering legislation 23 million times.
Financial intelligence agency AUSTRAC lodged a statement of claim in the Federal Court outlining the breaches, which plunged the bank into crisis and claimed the scalps of now-ousted chief executive Brian Hartzer and outgoing chairman Lindsay Maxsted.
Hong Kong police and Standard Chartered declined to comment.
Source: Thanks smh.com