Tencent dive on record fine reports for money laundering

(Bloomberg)-Tencent Holdings Ltd. cut losses by more than 10% after the Wall Street Journal reported that it faced record fines for violating China’s anti-money laundering regulations.

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The People’s Bank of China discovered that Tencent’s WeChat Pay allowed the transfer of funds for illegal purposes such as gambling, citing unidentified people familiar with the matter. WeChat Pay has also been determined not to comply with any other rules required to identify the user. According to the journal, merchants trading on the platform.

Potential money laundering research will open a new front in Beijing’s in-depth crackdown on the Internet industry. From ride hailing and e-commerce to online education, this is an effort that has already wiped out hundreds of billions of dollars in the arena. Unlike rivals Alibaba Group Holding Ltd. and Meituan, WeChat operators are not the direct target of government investigations.

The report will be released as Beijing prepares to step up its efforts to combat illegal money flows with the aim of avoiding systemic risk and strengthening the financial industry. Until 2024.

However, central bank officials discovered Pay fraud in competition with Ant Group Co.’s Alipay after completing routine inspections of the payments platform in late 2021. Regulators are discussing the magnitude of the imminent fine, but added that it could reach hundreds of millions of yuan, which is higher than was normally collected in the past.

Tencent shares closed at their lowest levels in almost two years on Monday, according to data compiled by Bloomberg. Spreads on Tencent’s dollar bonds by 2030 widened from 22 basis points to 228 basis points, almost in line with Friday’s surge. US deposits fell 7.2% in New York.

Shareholder sadness

Naspers Ltd., which invested in Tencent as a startup more than 20 years ago and continues to be the largest shareholder through Prosus NV, plunged 15% in Johannesburg, the highest since 2000. This year’s stock price has fallen 38%.

Prosus, which Naspers spun off in 2019 and owns e-commerce assets such as Tencent’s stock, fell 11% in Amsterdam and traded at record lows.

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A Tencent spokesperson did not immediately respond to a request for comment.

This report casts uncertainty on Tencent’s fast-growing fintech division. WeChatPay is the center of business for social media giants, helping in-game transactions, mini-programs such as the food delivery service Meituan and the ride-hailing app Didi, and merchant payments. As of 2021, WeChat Pay processed an estimated 40% of China’s mobile payments, second only to Alipay.

Under recently established regulations, Tencent needs to restructure its fintech business under a financial holding company, like Alibaba’s founder Jack Ma’s Ant. The operational impact is minimal and more complex.

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Elsewhere, Tencent has been working on a rapidly tightening regulatory environment.

The investment sector could be affected as President Xi Jinping’s administration becomes more vigilant about what it considers to be a “disordered expansion of capital.” ..

Regulators have imposed strict limits on underage game time and have stopped approving new games in the past few months. Last year, a tech supervisor in the country warned Internet companies to stop blocking rival services and urged them to start allowing external links to apps run by WeChat. Alibaba, ByteDance, etc.

Read more: Tencent talks about new crackdowns as Tech Wipeout deepens

(Updated with US Equity Trading in the 6th paragraph.)

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