This development comes amid the Trump administration’s tightening scrutiny on Chinese trade

Jack Ma’s new year has got off to a glum start, with the US government blocking the sale of its homegrown money transfer company MoneyGram to his e-payments service Ant Financial.

Since the proposed deal’s announcement early last year, it has been under scrutiny by the Committee on Foreign Investment in the US (CIFUS), who had cited “significant national security risks.”

In a press statement today, Alex Holmes, Chief Executive Officer of MoneyGram said the deal — which was valued at around US$1.2 billion — despite their “best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger.”

“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago,” he explained.

For the deal’s dissolution, Ant Financial has paid MoneyGram US$30 million termination fee.

The transaction’s collapse puts a damper on Ma’s plans to expand Ant Financial’s presence in global markets. The US is a significant point of interest for Ma — earlier this year, he had promised US president Donald Trump earlier this year that he had planned to create one million jobs in the US, as well as bring onboard one million US businesses onto Alibaba’s e-commerce platforms.

Despite the setback, MoneyGram and Ant Financial will still explore new initiatives under a new strategic business cooperation. They will work to develop and grow remittance and digital payments services in Asia regions such as China, India and the Philippines, as well as the US and other global markets.

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“Establishing this new strategic cooperation with MoneyGram will add a partner with global remittance capabilities to our ecosystem and, while Ant Financial won’t have a direct ownership relationship with MoneyGram, we look forward to working closely with the MoneyGram team to make our platform even more accessible – particularly to unbanked and underserved communities globally,” said Doug Feagin, President of Ant Financial International.

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Image Credit: Ant Financial

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