Tencent’s WeChat Pay Hong Kong fined HK$875,000 by HKMA for lapses in due diligence

The Hong Kong Monetary Authority (HKMA) on Friday said it has imposed a fine of HK$875,000 (US$112,205) on the local unit of Tencent Holdings’ mobile payment service provider, WeChat Pay Hong Kong, for lapses in implementing customer due diligence procedures.

The HKMA took disciplinary action against WeChat Pay following an investigation that covered a period of more than five years from August 2016 to October 2021, during which time the service provider failed to implement adequate and appropriate controls regarding customer due diligence.

The failures centred around guidelines on anti-money-laundering and counter-financing of terrorism through stored value facilities, according to a statement from the HKMA.

The HKMA said that WeChat Pay did not assess the risks involved after being tipped off by law enforcement agencies to conduct due diligence on mobile numbers involved in potential scams and confirm whether these numbers were linked with its customers.

The company was provided with 1,827 pieces of information involving 500 accounts. Of these, 98 were associated with 84 customers who were subsequently reported to the Hong Kong government’s Joint Financial Intelligence Unit (JFIU).

However, WeChat Pay did not act on the information immediately and delayed taking action for between 80 and 900 days, according to the HKMA.

The JFIU, which is jointly operated by the police and Customs and Excise Department, oversees the government’s suspicious transaction reporting regime and disseminates information to law enforcement agencies and financial intelligence units worldwide.

The monetary authority said that it had taken into account all relevant circumstances of the case in deciding the severity of the punishment. These included “the seriousness of the investigation findings, the need to send a clear deterrent message to the industry about the importance of effective controls and procedures to address money laundering and terrorist financing risks”, the HKMA said.

However, WeChat Pay has taken remedial measures to address the deficiencies identified by the HKMA, enhanced its systems of control and brought the matter to the attention of the HKMA, the statement added. WeChat Pay also cooperated with the regulator to resolve the concerns identified by the HKMA.

WeChat Pay said in an emailed reply to the Post that it had been working closely with regulatory authorities to resolve the matter.

“Upon recognising deficiencies in our enhanced due diligence processes, we proactively reported the issue and implemented remedial actions under the guidance of the Hong Kong Monetary Authority,” the company said. “The enhanced control mechanisms have been operating smoothly for nearly three years.”