Ant Group, Alibaba’s affiliate, faces a hefty $985 million fine from China

China’s central bank imposed a 7.12 billion yuan fine ($985 million) on Ant Group, an affiliate of Alibaba, on Friday.

The People’s Bank of China cited violations of various laws and regulations, including those related to corporate governance, consumer protection, and anti-money laundering requirements, as the reason for the penalty.

This fine is one of the largest ever imposed on a Chinese internet firm and marks a resolution to the years-long scrutiny and restructuring of Ant Group, following the cancellation of its $37 billion IPO in late 2020.

Since then, Ant has been compelled to transform itself into a financial holding company under the supervision of the PBOC, as part of Beijing’s extensive crackdown on China’s domestic tech sector.

Ant Group is primarily owned by Alibaba, with founder Jack Ma being the billionaire behind both companies.

The cancellation of Ant’s listing in 2020 was driven by regulatory concerns.

Recent developments indicate that Ant has been making progress in aligning with regulatory requirements. In January, the company gained approval to expand its consumer finance business.

This fine, along with the potential resolution of Ant’s regulatory issues, comes at a time when China aims to revitalize its private sector amid a challenging domestic economic situation.

In its statement on Friday, the PBOC noted that most of the outstanding problems in the financial activities of platform companies like Ant Group have been rectified. This suggests a shift towards “normalized supervision,” indicating a potential easing of strict measures such as fines.

Ant Group affirmed its commitment to compliance governance in a statement on Friday, stating that it will earnestly comply with the terms of the penalty.

A possible listing for Ant Group now takes the spotlight, although the company’s valuation has significantly declined in the past two and a half years.