Chinese staff’s demand for client data raised the alarm at Airwallex
An executive at Airwallex raised an alarm that demands for freer access to customer data were being driven by the payment giant’s employees in China.
The global remittance business, most recently valued at $9.5 billion, is backed by major Australian venture capital firms and a string of heavyweight Chinese investors including Tencent and HongShan Capital.
Questions about access to the private information of clients emerged last week after a high-profile Silicon Valley venture capitalist accused Airwallex of handing over sensitive data to Chinese government officials.
Keith Rabois, the managing director of Khosla Ventures and a member of the so-called PayPal Mafia alongside Peter Thiel and Elon Musk, said Airwallex had “become a Chinese backdoor into sensitive American data”.
Airwallex and its billionaire chief executive, Jack Zhang, have long denied these suggestions, describing Rabois’ allegations as “inaccurate”.
But messages sent on the company’s internal platform show there were internal concerns too. In one note, Airwallex strategy and operations head Briar Mercier said that sales teams were resisting efforts to limit access to customer files because they were concerned about “revenue loss”.
She added, in the message sent in 2023, that this push for access was not being driven by the Australian commercial team “and I am making the presumption after speaking with Sam this is being driven by [China]“.
Founded in Melbourne by Zhang and others in 2015, Airwallex is one of Australia’s few home-grown tech unicorns after it secured backing from major local venture capital players Square Peg, Blackbird and Airtree.
It facilitates foreign exchange transactions primarily for small business and individual clients at an ultra-low cost, side-stepping older, more expensive infrastructure such as the international SWIFT bank transfer system.
In the decade since, the company’s value has soared, catapulting Zhang onto the Financial Review Rich List with a personal fortune approaching $1.3 billion. If it eventually secures a long-fancied public float, the IPO will make instant millionaires of early-stage staff with lucrative equity rights. Yet, throughout its life, Airwallex has faced persistent questions about an apparent “profit-at-all-costs” culture and murky origins.
The Australian Financial Review has previously reported that the company, which is now domiciled in the Caymans Islands, had a series of backers based in the same jurisdiction and in China. Tencent, a Shenzhen-based entertainment and media giant, owns 12 per cent of the company as recently as August 2022, per an internal company presentation.
The Financial Review has also reported the company had failed to conduct proper due diligence checks of its staff and questioned whether it was possible to get around Hong Kong’s ultra-strict anti-money laundering laws.
Internal documents also showed it had mis-configured alerts on potentially problematic customers and transactions that created an enormous backlog for compliance staff, and was even warned by its compliance team that it was hawking products in China without the proper licence.
Rabois’ comments last week brought many of those issues back to the fore.
In a series of posts on X on Tuesday evening, Rabois alleged Airwallex’s sizeable Chinese operations, infrastructure and investors “create legal obligations to assist with CCP espionage upon request”.
Rabois is a former PayPal executive who, like Musk and Thiel, has become an outspoken investor. He has also held senior roles at LinkedIn, and made early investments in YouTube, Airbnb, and Palantir Technologies.
“Thanks to you, the Chinese government now has direct, covert, legally enforceable access to sensitive financial information belonging to America’s AI labs, defence contractors … and Fortune 500s,” Rabois wrote.
In his own posts to the Musk-owned social media platform, Airwallex co-founder and chief executive Jack Zhang accused Rabois of “circulating inaccurate claims” to damage the company in the aid of one of Khosla Ventures’ own unspecified portfolio businesses.
The spat between Rabois, who is an investor in Airwallex competitors Stripe and Ramp, and Zhang will probably raise eyebrows for a hawkish Trump administration determined to limit the influence of Chinese firms operating in the United States.
Mercier’s messages indicate that concern about access to customer data from China had circled internally for some time before Rabois’ comment.
The 2023 message relates to know your customer data – critical information such as names, birth details and identifying documents including Medicare or passport numbers that financial services firms must collect to verify who their customers are and ensure that they are not financing illicit activities.
Mercier relayed that a sales administrator had said: “While we understand fully that this is a potential compliance breach, we also hope to find a balance to minimise revenue loss”.
Airwallex’s Singapore-based head of corporate affairs, Mae Loon, was contacted for comment, but did not respond to emails or texts.
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