JD.com under fire: Regulators fine Chinabank Payments over forex transactions

Foreign exchange regulators in China have fined JD.com's Chinabank Payments on charges of illegal transfer of foreign currencies to other countries. The information appeared on China's State Administration of Foreign Exchange's website on Tuesday.

Chinese regulators have fined Chinabank Payments 29.43 million yuan, according to Reuters. This makes it $4.18 million is one of the highest financial penalties imposed ever on a third-party payment processor.

The website mentioned that the penalty has been slapped by China's foreign exchange regulator's office in Beijing.

What's the charge?

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Internet Banking Online (Beijing) Technology Co Ltd, which is better known as Chinabank Payments, has been charged with siding with residents of mainland China, who illegally transferred foreign currency to other countries. The transactions also include transfers to licensed international gambling sites.

The transactions were carried out through a number of payment channels in mainland China. Most of these payment channels were created between 2017 and 2018.

Internet Banking Online (Beijing) Technology Co Ltd or Chinabank Payments is owned by JD Finance, which is owned by JD.com and was formed in 2018.

Negligence leads to penalty

Chinabank Payments could have avoided the penalty had it been more cautious and vigilant about the dealing of some of its users in the past.

Chinabank Payments said in a statement that it was negligent with some of its users' access that was later manipulated by external merchants to carry out these illegal transfers of foreign currencies.

"Chinabank Payments seriously reflected on our business management and carried out rectifications. We apologise for the negative impact we caused to the industry," the statement read.

China tightens noose

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This is not the first time that JD.com has some under the regulatory scanner. China has time and again made kept a close watch on its Macao casinos and has attempted to restrict underground banking linked to them.

There has been a considerable rise in illegal banking and transaction involving users from mainland China and casinos in Macao, with local authorities being reported higher number of cases of suspected gambling payments.

In fact, JD.com was among the many mainland China-related financial services which was warned and alerted by the Monetary Authority of Macao (AMCM) in October regarding unauthorized financial activities.