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.