Chinese financial authorities have imposed a massive fine of more than 7 billion yuan on Ant Group, Alibaba’s fintech subsidiary. Analysts say that the authorities’ pressure on Alibaba has virtually ended.
China Central Television reported on the 7th that the People’s Bank of China and other financial management departments imposed fines of 7.123 billion yuan on Ant Group and its subsidiaries by applying the People’s Bank Act, Anti-Money Laundering Act, and Banking Supervision and Management Act. Ant Group’s medical expense mutual aid platform, Xianghu Bao, was also demanded to be closed. Xianghu Bao is a system that helps each other by “hugging” medical expenses among subscribers.
The fine imposed on Ant Group is the second-largest among fines imposed by Chinese authorities on Internet companies, after 8.026 billion yuan received by car-sharing company Didi Chuxing, which was fined in the form of a punishment for pushing ahead with the U.S. listing.
Separately, the People’s Bank of China also confiscated 560 million yuan in illegal income and imposed a fine of 2.42 billion yuan on Tencent Group’s fintech affiliate Chai Putong. Ant Group and Chai Phutong are companies that operate China’s two major mobile payment methods, Alipay and WeChat Pay, and their market share exceeds 90%.
Authorities stipulated that Ant Group and its affiliates violated laws such as company management and financial consumer insurance, participation in bank insurance organization activities, payment settlement work, anti-money laundering obligations, and fund sales. “We instructed large platform companies such as Ent Group and Tencent Group to correct violations of financial-related laws,” he said. “Currently, platform companies have corrected most of the financial business-related problems.”
Alibaba founder Ma Yun was determined and critical of the authorities’ financial regulations at a public event in October 2020, just before Ant Group’s listing. The Chinese government immediately launched a crackdown. After suspending Ant Group’s listing on the Hong Kong and Shanghai stock markets, which was scheduled for November of that year, it pressured Alibaba Group in all directions, including imposing a record 18 billion yuan in antitrust fines.
“Chinese authorities will fine Ant Group and finalize punishment measures,” Reuters said. If Ant Group pays the fine, it will be able to obtain a financial holding company license, completely separate it from Alibaba, and resume its stock market listing plan. Reuters explained, “Ant Group will secure a long-awaited financial holding company license to set the stage for reviving its plan to enter the market.”
