Tencent ‘Facing Record Fine’ Over Payment Violations

Chinese tech giant Tencent Holdings is reportedly facing a potentially record-breaking fine into the hundreds of millions of yuan over violations of money-laundering rules, as China continues to tighten regulations on fintech companies.

Tencent’s WeChat Pay is an integral part of its ubiquitous WeChat app, which also includes messaging, gaming and shopping functions and is more widely used than email in China.

Financial regulators discovered the tool had lapses in compliance with money-laundering rules, “know your customer” and “know your business” regulations, The Wall Street Journal reported.

Money laundering

The lapses included allowing the laundering of illicit funds from transactions such as gambling, the paper said.

The regulations require WeChat Pay to verify the identity of users and merchants on the platform and the source of funds for transactions.

Central bank the People’s Bank of China (PBOC) discovered the breaches in a routine inspection that concluded late last year, the paper said.

The size of the fine, up to hundreds of millions of yuan, or tens of millions of pounds, is much larger than previous fines imposed on non-bank payment companies for breaches of money-laundering rules.

The company’s shares closed about 10 percent down on the report.

Tighter controls

Tencent has so far remained relatively unaffected by a regulatory crackdown that has affected many of its competitors.

Ant Group, which operates WeChat Pay competitor Alipay, was forced to restructure last year, while affiliate company Alibaba Group was made to abandon an initial public offering in November 2020 and was fined a record 18bn yuan (£2.18bn) for antitrust violations in 2021.

Since late 2020 regulators in the country have tightened controls on sectors ranging from online shopping to ride-hailing, Bitcoin mining and gaming.

China recently launched a three-year campaign to fight money laundering, led by the PBOC and the Ministry of Public Security.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

Recent Posts

OpenAI Tests Search Engine Prototype Called ‘SearchGPT’

Google's dominance of online search is being challenged, after OpenAI unveiled a search prototype tool…

15 hours ago

Elon Musk To Discuss $5 Billion xAI Investment With Tesla Board

Conflict of interest? Elon Musk to talk with Tesla board about making $5 billion Tesla…

19 hours ago

Amazon Developing Cheaper AI Chips – Report

Engineers at Amazon's chip lab in Austin, Texas, are racing ahead to develop cheaper AI…

2 days ago

Apple Smartphone Sales In China Drop 6.7 Percent, Canalys Finds

China woes. Apple's China smartphone shipments decline during the second quarter, dropping it down into…

2 days ago

Meta Ordered To Clean Up AI-Generated Porn By Oversight Board

Oversight Board orders Meta to clarify rules over sexually explicit AI-generated images, after two fake…

2 days ago