Investing.com – Tencent (HK:0700) (OTC:TCEHY) stock was down 10.2% in Hong Kong trading Tuesday, its second straight day of such heavy losses on reports the online giant faces a potential record fine because of its mobile app WeChat Pay violating its home country’s central bank rules on money laundering and '‘know your customer’' process.
While the final penalty is not known, reports say it could run into billions of yuan.
According to WSJ, there were also lapses in compliance with ‘know your customer’ and ‘know your business’ norms – standard protocols regulators world over mandate entities follow to verify the authenticity of the customer and their eligibility to carry out transactions on the platform.
The breaches were discovered by the country’s central bank in late 2021.
The impending penalty comes as Chinese fintech platforms prepare for stricter regulation of their operations amid their government’s attempts to curb money laundering activities.
The Dutch-listed shares of Prosus (AS:PRX), the vehicle that holds South African giant Naspers' Tencent stake, are also bearing the brunt of the impending Chinese action. They are down 10% in today’s trading in Amsterdam after closing as much lower Monday. NYSE-listed shares of Tencent Music Entertainment (NYSE:TME), a subsidiary, are down 2.6% in premarket trading after closing 9.3% lower in the previous session.
Tencent has so far been relatively unscathed in Chinese authorities' crackdown on big internet platforms that hurt the likes of Alibaba (NYSE:BABA), Meituan (OTC:MPNGY), and Didi (NYSE:DIDI). Last year, it complied with the regulators’ demand that it should limit the time children spend on its video games.