The People’s Bank of China (PBOC), the country’s central bank, may levy record fines against Tencent’s WeChat Pay for failing to comply with KYC and AML regulations. The PBOC discovered these violations during an inspection of the company in 2021.

Why should we care?
While Chinese tech giants like Alibaba, Meituan, Didi Global, and Ant Group have all faced heavy-handed fines and probes, Tencent has largely been left alone throughout the Chinese government’s efforts to shape the country’s tech landscape in its image. This new WeChat Pay development suggests a potentially massive shift in the Chinese fintech landscape that’s been months in the making. Last year, the PBOC said that nonbank payment companies are obligated to prevent money laundering on their platforms, leveling the playing field between traditional financial institutions and more recent (yet ubiquitous) digital systems like WeChat Pay and Alipay. What’s more, the PBOC may levy fines against fintechs according to the total count of violations—not the size or severity of each discrete violation. This could deliver a huge blow to the largest fintech companies, who also have to muster the most resources to meet higher compliance standards. We may expect new payments startups to enter the scene, hoping to take advantage of current political turbulence in Chinese fintech.