News

FCA probes Airbnb over financial crime controls

27/11/2020

UK: UK regulator and City watchdog, The Financial Conduct Authority [ FCA ], has been investigating Airbnb’s money-laundering and counter-terrorist financing controls, it was revealed in the platform’s S-1 filing last week for a projected initial public offering [ IPO ] next month.

The FCA scrutinised Airbnb over concerns that the UK division’s safeguarding controls on its payment system are inadequate and leave a gap for money launderers or terrorist financiers to exploit it by recruiting hosts and booking fake stays.

The Authority was said to have recruited a “third-party skilled person” to review the systems and controls of Airbnb Payments UK [APUK] when the firm pinpointed “gaps” in the way it had complied with regulations designed to protect consumer funds.

Airbnb stated that it had come up with remedies to resolve the issues but that the FCA had identified “certain issues with APUK’s anti-money laundering and counter-terrorist financing systems and controls”.

The home-sharing platform hopes to raise up to $3 billion through its upcoming IPO, as the S-1 filing last week laid bare the scale of the financial impact caused by the Covid-19 pandemic on the company.

The platform reported a net loss of $697 million on revenue of $2.5 billion in the nine-month period ending on 30 September, which compared to a net loss of $323 million on revenue of $3.7 billion from the same period a year ago.

Airbnb’s offering will be led by Morgan Stanley and Goldman Sachs, and the company’s shares are set to trade on the Nasdaq Global Select Market under the symbol ABNB.

In August, the regulatory body proposed to extend its requirements to provide specific information about companies susceptible to financial crimes such as money laundering, including cryptocurrency exchanges.

At the time, the FCA estimated that only 11 per cent of the 23,000 companies it was supervising under an anti-money-laundering law in 2017 had submitted the relevant information about potential exploitation risks. The Authority wants to cover a wider range of different-sized companies across different sectors to strengthen the UK financial system’s integrity.

It also came as The Wall Street Journal reported that Airbnb’s chief trust officer, Sean Joyce, left the company after only six months last year due to a dispute over Airbnb’s supposed data-sharing practices in China.

Joyce was believed to have objected to the scope of data being shared, such as phone numbers and email addresses, with the Chinese government when a traveller books a stay at any hospitality operator in China. The former chief trust officer, who joined Airbnb in May last year, voiced concerns that the Chinese government would be able to track foreign visitors and its own citizens, reported the publication.

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