Tencent faces record fine over WeChat payments: Report

Chinese technology giant Tencent Holdings Ltd faces a record fine for violations of some central bank regulations by its WeChat Pay mobile network, as Beijing toughens its regulations for fintech platforms, the Wall Street Journal has reported, citing people familiar with the matter.

With this, Tencent’s shares extended losses to trade as much as 10.3 percent lower in afternoon trading.

As per the report, the financial regulators recently found that WeChat Pay had flouted China’s anti-money laundering rules.

The report also stated that it also failed to comply with “know your customer” and “know your business” regulations, among other things.

It was also found to have enabled the transfer and laundering of funds with illicit transactions such as gambling, the people said.

The breaches were discovered by the Chinese central bank during a routine inspection that concluded in late 2021, the people said.

They also said that the amount of the fine is still under deliberation and could be at least hundreds of millions of yuan which would be much higher than the fines imposed on non-bank payment companies in the past.

The impending penalty comes as Chinese fintech platforms prepare for tighter oversight of their business amid the government’s attempts to curb money laundering activities.

A probe into potential money-laundering would open a new front in Beijing’s sweeping crackdown on the internet industry, an effort that’s already wiped out hundreds of billions of dollars in arenas from ride-hailing and ecommerce to online education.

Tencent itself has thus far mostly escaped formal regulatory action, unlike other rivals like Alibaba Group Holding Ltd and Meituan, the WeChat operator hasn’t yet been the direct target of any government

probe.

WeChat Pay helps transactions within games, mini-programs like food delivery service Meituan and ride-hailing app Didi, as well as merchant payments for more than a billion consumers across the country.

As of 2021, the payment giant handled an estimated 40 percent of China’s mobile payments, second only to Alipay.

Meanwhile, the Chinese stocks plunged on Monday as a continued surge of COVID cases further clouded the economic outlook, while regulatory concerns and U.S. delisting risks sent Hong Kong-listed tech giants to a new low, dragging down the Hang Seng benchmark.