Following a routine inspection of WeChat Pay at the end of 2021, the People’s Bank of China is expected to impose a heavy fine on Tencent, according to an article by the wall street journal of March 14. This news caused the Chinese group’s share price to fall by 10% in Hong Kong.
In China, anti-money laundering regulations have been tightened
WeChat Pay is accused of not having sufficiently verified the identity of its users, individuals and merchants. The Chinese central bank also accuses him of a lack of supervision over transactions and of having accepted transfers of illicit money, in connection with gambling.
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Tencent could face a fine of at least several hundred million yuan, according to the sources of the wall street journal. The sum, still under discussion, is already announced as much higher than the usual penalties for this type of business. According to the central bank’s latest report in 2020, 537 institutions were fined 526 million yuan in total, or $83 million.
China has significantly tightened its antitrust, data protection and money laundering regulations. Now, the fines are higher and non-bank payment companies like Tencent have an obligation to detect and prevent money laundering like any financial institution. An exercise far from obvious for a platform exceeding one billion users.
After Tencent’s WeChat, Ant Group’s Alipay?
Since the takeover of the digital sector by the Chinese authorities at the end of 2020, Tencent has been relatively spared compared to Alibaba, Didi or Meituan. The company couldn’t create its super-streaming platform, had to sell off music labels, but its super app to 1.26 billion WeChat users hasn’t been hit by significant penalties. This time, the video game giant will not manage to pass between the drops.
The central bank identified Tencent’s violations during an inspection the companies undergo about every three years. After WeChat Pay, the next service China’s central bank will look into is likely to be Ant Group’s Alipay. Faced with the same problems as Tencent, namely an impressive number of users, the Fintech sister of Alibaba would have started to prepare by simulating inspections. The final amount of fine that awaits Tencent should give Ant Group a good idea of the sauce it might be eaten with.