Pressure is mounting on the Australian Securities and Investments Commission to revoke special regulatory relief it granted to controversial mobile payments provider, Revolut Ltd.
In January ASIC granted a nine-month exemption to the UK-based fintech that cleared a path for it to market prepaid Visa cards and international currency services to Australian customers without a financial services licence.
The company is planning to launch in Australia this month but its prospects look less certain after a recent wave of negative newspaper reports in London that allege the company last year failed to tell UK regulators about a protracted breakdown in its anti-money laundering systems.
Leading payments and regulatory experts last night called on ASIC to reconsider the licensing relief that has allowed Revolut to open for business in Australia.
Dr Patrick McConnell, a widely respected risk management expert and retired Macquarie University academic, believes ASIC should review its decision.
"I would say that ASIC should certainly consider reviewing the licence exemption in Australia given the events of the last month that have included concerns around the company's AML compliance.
"There are so many red flags going up at the moment that you need to ask the question whether ASIC really wants to allow this company to operate in Australia."
Grant Halverson, the former managing director of Diners Club in Australia and founder of the McLean Roche payments consultancy firm, said ASIC should "move with urgency" to review the exemption.
"Fintechs have shown a tendency to break the rules and ignore regulators based on their ethos that they are creating a new financial world," he said.
"This has been going on for a decade so there is no excuse for a regulator like ASIC not being aware of what's really going on in the fintech space."
As the pressure builds on ASIC to revoke the exemption, the allegations of AML non-compliance are also likely to engage the minds of senior risk executives at ANZ.
Banking Day understands that ANZ is providing transaction banking services to Revolut in Australia, but the bank would have an obligation to review the relationship if UK regulators decide that Revolut breached its anti-money laundering requirements.
It's possible that ANZ might move to sever the relationship earlier if it forms a view that it might risk incurring reputational damage from an association with Revolut in Australia.
In the last week, Revolut's founder and chief executive Nikolay Storonsky rejected claims that the company breached its AML reporting requirements to regulators.
However, in an open letter to staff and customers on Monday, the Revolut boss conceded that his organisation's culture had not always been up to scratch.
Former Revolut employees told Wired.co.uk last week that the company's aggressive management style had produced a "toxic culture" marked by rudeness and an obsession with sales targets.
The results, they claim, were a high staff turnover rate and some people receiving no pay.
Storonsky did not refute these allegations in his letter but said the cultural problems mostly belonged to the past.
"The point of this open letter is not to make excuses or attempt to rubbish the claims in the article, but to admit that we haven't always gotten things right, and to emphasise that we are not the same company that we were 12-18 months ago, when these mistakes were made," he said.
"When I look back at some of our past mistakes, I'm certainly not proud of them, but I am proud of what we have learned along the way, and the direction that we're now heading in."