Chinese tech giant Tencent is facing potential record fines for violations of some central bank regulations by its WeChat Pay mobile network, as Beijing toughens its compliance for fintech platforms.
Financial regulators recently discovered that WeChat Pay had flouted China’s anti-money-laundering rules and had lapses in compliance with “know your customer” and “know your business” regulations, among other a myriad of other potential compliance violations.
Tencent’s ubiquitous mobile payments network was also found to have allowed the transfer and laundering of funds with illicit transactions such as gambling. For WeChat Pay, “know your customer” and “know your business” procedures mean it must verify the identities of users and merchants transacting on its platform and the source of funds for those transactions.
The People’s Bank of China uncovered the breaches during a routine inspection of WeChat Pay that concluded in late 2021. The size of the fine is still under deliberation, and it could be hundreds of millions to billions of yuan. That would be much larger than the fines regulators typically imposed on nonbank payment companies for anti-money-laundering rule violations in the past.
Shares of Tencent, which had been down 6.8% today, extending losses to nearly 10% and closed at their lowest level in nearly two years, according to FactSet. A broader selloff in Chinese stocks drove the Hang Seng Index down 5%.
Source: Wall Street Journal