ASIC probes payments firm CurrencyFair

The corporate cop is investigating cross-border payments platform CurrencyFair, after the Irish fintech put a halt on Australian transactions.

CurrencyFair is under regulatory scrutiny after it put a freeze on Australian transactions.

The corporate cop is probing cross-border payments platform CurrencyFair after the Irish fintech put a halt on Australian transactions, freezing customers out of their accounts.

The foreign exchange network, founded by Australian Brett Meyers in 2010, in February halted all transactions in and out of the country for Australian residents “due to unexpected issues”, telling customers they would not be able to exchange or transfer any existing funds held in their accounts.

The company said the pause would be temporary but has provided no end date, leaving customers scrambling for access to their locked-up funds. It is not currently onboarding new customers in Australia.

Speaking to The Australian, chief executive Shamus Hodgson sought to downplay the matter, describing it as a technical issue, while adding that the company halted operations following communication from the financial crime watchdog AUSTRAC.

“We had a communication from AUSTRAC, one of our regulators in Australia, regarding a licence application we put in back in 2021. There were some technical issues with that licensing application, which meant that AUSTRAC’s asked us to suspend remittance services in Australia as of the 19th (of February) immediately,” Mr Hodgson said.

“It’s a temporary suspension … We’re resolving that, we hope to have that resolved ASAP and we’re working with AUSTRAC to provide them with the information they need in order to get that licence back in place,” he added.

While some customers have managed to access their monies after weeks of delays, The Australian understands others have so far been unsuccessful, with emails going unanswered and a voicemail saying to call back during Irish opening hours.

Mr Hodgson said only “a very small number of (Australian) customers still have money in the system”.

Meanwhile, after shutting out its Australian customers and seeing a spike in call volumes over delayed transaction volumes globally, its Irish contact centre moved to reduce opening hours to two-hour blocks, only answering phones between 9-11am and 3-5pm GMT Monday to Friday.

An ASIC spokesperson told The Australian: “ASIC is aware of concerns raised in relation to CurrencyFair/Zai and is undertaking inquiries. ASIC is not in a position to comment further.”

Zai is CurrencyFair’s sister brand, born out of the merger of CurrencyFair and Australian eCommerce payments company Assembly Payments in 2021.

In February CurrencyFair halted all transactions in and out of the country for Australian residents ‘due to unexpected issues’. Picture: iStock

While Australia is the only jurisdiction CurrencyFair has halted transactions, the Irish regulator, the Central Bank of Ireland, may also be looking into complaints of blown-out wait times. The Irish central bank declined to comment when approached by The Australian.

CurrencyFair is also obligated to file annual accounts with Companies Registration Office in Ireland by October 30 each year but has yet to file its 2022 accounts, due at the end of October last year.

Mr Hodgson declined to say why the accounts were late.

A Companies Registration Office spokesperson said: “CRO is a repository which receives statutory information from companies. The penalties for failure to file include a daily late filing fee and the loss of the audit exemption where appropriate. CRO also has the power to take enforcement action up to and including strike off against companies who are late in filing their annual returns.”

CurrencyFair was launched in Ireland over a decade ago and was one of the first peer-to-peer money transfer services established, allowing users to avoid hefty bank transaction fees when exchanging currencies. Mr Meyers stepped down as CEO in 2016, staying on the board until 2021.

The foreign exchange operator was for years consistently rated alongside peers OFX and Wise as offering quick transfers with bank-beating rates. CurrencyFair’s offering had an additional appeal in the market in that customers had the option to set their own rate, send their money to CurrencyFair and then leave it sitting there waiting for a match on its marketplace.

This marketplace function was removed at the end of last year, with CurrencyFair stating: “The holding of funds with CurrencyFair, for unlimited periods, is not permitted. Any such funds held (on the Marketplace) are classed as aged funds and must be transferred out.”

Already having an Australian link through its founder, CurrencyFair strengthened its local connection when it merged with one of Australia’s oldest fintech start-ups in 2021.

Assembly Payments, an ecommerce payments company, was founded in 2013 by Darren McMurtrie, Simon Lee and Simon Jones and known then as PromisePay.

After a name change in 2017, and with backing from SC Ventures, the VC arm of Standard Chartered, Currency Fair and Assembly Payments merged in 2021 and rebranded as Zai, keeping the CurrencyFair name for its retail cross border transfer division. Standard Chartered is CurrencyFair’s largest shareholder.