Image source: caixinglobal.com
Written by: Ethan Price
March 15th, 2022
The People's Bank of China, the country's central bank, recently discovered that the major Chinese tech company Tencent Ltd has been bypassing the country's anti-money laundering regulations. Because of this, Tencent is set to receive record breaking fines in terms of dollar amount and could even face a potential disband.
The reason for the commotion is based around Tencent's payment-to-messaging app "WeChat". The central bank came across the problem during a routine check of "WeChat". The app was allowing unknown persons and businesses to exchange large sums of money without requiring any verification. The People's Bank seems to believe that many of the unrecorded transactions were involved with illegal betting and gambling (WSJ).
This situation is coming at an awful time for Tencent, as they have been in an undesirable spotlight for the last year after their online gaming platform has received negative feedback for causing online addiction and myopia among kids (Reuters).
While no one can be certain with the dollar amount behind the fine just yet, we can most likely expect it to cause setbacks for Tencent. Tencent's stock has been dropping and will most likely continue to drop over the next few weeks. This could create opportunity for upcoming tech companies in China to break into the market as a giant begins to stumble.