Austrac CEO John Schmidt, says an assessment of PayPal Australia "revealed deficiencies in the systems PayPal had in place to assess and manage its money laundering and terrorism financing risk".

Following prolonged negotiations, PayPal has agreed to strengthen its existing systems and controls to comply with risk assessment requirements and submit an independent expert report detailing its compliance with the rules.

The enforceable undertaking from Austrac relates to PayPal's failure to implement adequate know-your-customer mechanisms for transactions under the A$1000 threshold.

Austrac is empowered to accept enforceable undertakings as a means of ensuring compliance with the AML/CTF Act, including as an alternative to taking criminal or civil enforcement action.