Tencent faces record fine over WeChat payments, WSJ says
[HONG KONG] Tencent Holdings faces a record fine after China's central bank discovered its WeChat Pay had violated money-laundering rules, the Wall Street Journal reported, citing people familiar with the matter.
The People's Bank of China found Tencent's payments platform had allowed the transfer of funds for illicit purposes such as gambling, the newspaper reported. WeChat Pay was also judged non-compliant with other rules that required Tencent to identify users and merchants transacting on the platform, the Journal said.
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 e-commerce to online education. Tencent itself has thus far mostly escaped formal regulatory action. Unlike rivals Alibaba Group Holding and Meituan, the WeChat operator hasn't yet been the direct target of any government probe.
A Tencent spokesperson did not immediately respond to a request for comment.
Tencent's investment arm could be impacted as President Xi Jinping's administration grows wary of what it deems a "disorderly expansion of capital," while WeChat has drawn scrutiny from regulators for building an enclosed Internet ecosystem that spans everything from e-commerce to short videos and online payments. Last year, the country's technology overseer warned Internet firms to stop blocking rival services, prompting WeChat to start allowing external links to apps run by the likes of Alibaba and ByteDance.
Under recently established regulations, Tencent is required to restructure its fintech business under a financial holdings company much like Alibaba founder Jack Ma's Ant Group. But the connection between WeChat Pay and the rest of Tencent's finance division could make the separation, which executives have said would have minimal impact on operations, more complicated.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Tencent's shares extended losses to trade as much as 10.3 per cent lower in afternoon trading. BLOOMBERG
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Banking & Finance
Nomura, Mizuho face losses on All Blue fund’s failed trades
Stablecoin Tether steps up monitoring in bid to combat illicit finance
HSBC asked by US$890 billion investor group to set energy goal
Barclays is the latest firm to face anti-ESG wrath in Oklahoma
Barclays prices mortgage-backed notes in deal with GoldenTree
TD risks an earnings hit from US laundering probe, analysts say