(Yicai) July 24 -- China has placed three major payment platforms, namely Alipay, Tenpay and NetsUnion Clearing Corp., under the direct anti-money laundering oversight of the country’s central bank, as part of a broader push to tighten financial regulation and curb illicit transactions.

The People’s Bank of China 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 subject to anti-money laundering supervision by the central bank already included three major policy banks, six state-owned commercial banks, nine joint-stock commercial banks, two brokerages, two insurance companies, China UnionPay and UnionPay International.

Alipay and Tenpay, both non-bank institutions, play a dominant role in China’s third-party payment sector. UnionPay led the market with a 26.6 percent share last year, followed by Shanghai-based Alipay at 20.7 percent and Tenpay at 18.3 percent, according to industry data.

NetsUnion was founded in August 2017 in Beijing with the central bank’s approval. It is a key part of China’s financial infrastructure, acting as a licensed clearing house for payments 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," the Securities Times reported yesterday, citing 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 major area where third-party payment firms have fallen foul of regulators in recent years. In 2024 alone, the central bank issued 55 penalties to such companies, with fines and confiscations amounting to around CNY174 million (USD24 million). The heftiest penalties, which refer to those exceeding CNY10 million (USD1.4 million), were tied to anti-money laundering violations and weak customer identity verification practices.

Editor: Kim Taylor