China has placed three major payment platforms, Alipay, Tenpay and NetsUnion Clearing Corporation, under the direct anti money laundering oversight of the People’s Bank of China (PBOC), as part of a wider effort to strengthen financial regulation and tackle illicit transactions.
According to Yicai, the central bank recently revised the Measures for the Supervision and Administration of Anti Money Laundering in Financial Institutions (Trial).
The 2014 version of the list of financial institutions already subject to the PBOC’s oversight included three major policy banks, six state owned commercial banks, nine joint stock commercial banks, two brokerages, two insurance firms, China UnionPay and UnionPay International.
Alipay and Tenpay, both non bank institutions, have a dominant position in China’s third party payments sector.
UnionPay led the market with a 26.6% share last year, followed by Shanghai based Alipay with 20.7% and Tenpay with 18.3%, according to industry data.
NetsUnion, established in August 2017 with the central bank’s approval, plays a critical role in the country’s financial infrastructure by serving as a licensed clearing house for transactions made by commercial banks and non bank payment firms.
“Alipay and Shenzhen based Tenpay together essentially form a duopoly in the non bank payments space, making them systemically important payment institutions,”
said Dong Ximiao, Deputy Director of the Shanghai Institute for Finance and Development.
“However, when it comes to enforcing real name account registration and other anti money laundering measures, they still lag behind traditional banks.”
Anti money laundering compliance has become a significant regulatory focus for third party payment firms in recent years.
In 2024 alone, the PBOC issued 55 penalties to such companies, with fines and confiscations amounting to around CNY174 million (US$24 million).
The most severe penalties, those exceeding CNY10 million (US$1.4 million), were related to failures in anti money laundering practices and weak customer identity verification.
Featured image credit: Edited by Fintech News Hong Kong, based on image by xb100 via Freepik
