TikTok’s involvement in potential money laundering activities has raised significant concerns, leading to an investigation by Australia’s anti-money laundering authority, AUSTRAC.
The issues emerged when TikTok misled Irish regulators about gaps in its payment screening process. The platform operates a payment system where users can give digital gifts to streamers, which can be redeemed for real money. This system has become popular, especially among the platform’s younger user base, with some users generating thousands of dollars weekly from gifts.
The problem came to light in Turkey in 2022 when authorities discovered millions of dollars being transferred via TikTok to accounts suspected of being linked to terrorist groups. HSBC subsequently closed TikTok accounts due to inadequate controls, prompting Irish banking regulators to inquire about large cash movements associated with the account closures.
Initially, TikTok dismissed these transfers as routine business practice. Still, it later disclosed the real reason behind them, which raised further concerns about the platform’s compliance with anti-money laundering regulations.
Senator James Paterson, a critic of TikTok due to its potential ties to the Chinese Communist Party, called for AUSTRAC to investigate TikTok’s activities. He expressed concerns about national security risks if TikTok’s platform was implicated in counter-terrorism financing activities. TikTok has denied being owned or controlled by the Chinese Communist Party and emphasized its commitment to compliance with legal obligations. The company stated that it had not received any queries from Australian regulators regarding the issue.
Despite tightening compliance in Turkey following the 2022 issues, TikTok has faced scrutiny in various Western countries. In the United States, there has been a proposal to force ByteDance, TikTok’s parent company, to sell the app or face a ban, although this effort has stalled in the Senate.
In Australia, TikTok is under investigation by the Office of the Australian Information Commissioner for allegedly breaching privacy rules by collecting data without consent. TikTok has denied these allegations.
