The regulation of tech companies in China is getting tougher as Tencent is now facing a potential fine for breaching the central bank’s compliances. It is suspected of allowing money-laundering schemes using WeChat.
The country’s regulators found out that Tencent’s mobile payment network WeChat Pay allowed laundering of funds, including gaming, the Wall Street Journal reported. The company also allegedly had breaches in regulations related to verification of users’ identities and the source of funds for transactions.
Last year, the Chinese government proposed amendments to the anti-money-laundering law, planning to strengthen the regulations. The People’s Bank of China (PBOC) said that payment companies must also prevent money laundering, just like financial institutions.
The PBOC fined 537 companies for a total of ¥526 million ($83 million) in 2020. It has already imposed small fines on WeChat Pay and found new breaches during the latest inspection of Tencent’s payment network in late 2021.
The size of the potential fine for Tencent is still unknown. According to the WSJ, it could be at least hundreds of millions of yuan, or tens of millions of dollars. If imposed, it would probably be the largest fine among nonbank payment companies.
WeChat has a MAU of 1.26 billion users, with the majority of them being from China. The platform includes many services and is used to make payments in stores, online games, and shops, as well as peer-to-peer money transfers.