Ant Financial, an affiliate of Chinese internet titan Alibaba, has been forced to abandon a $1.2 billion deal to buy US remittances firm MoneyGram after failing to get approval from regulators in Washington.

The decision by the Committee on Foreign Investment (CFIUS) will deal a blow to Alibaba boss Jack Ma's push into the world's biggest financial market and follows a number of moves to prevent Chinese purchases of US firms.

The companies jointly announced the termination of the proposed takeover on Tuesday, with MoneyGram chief executive Alex Holmes saying: "The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago.

"Despite our best efforts to work cooperatively with the US government, it has now become clear that CFIUS will not approve this merger."

The deal, announced a year ago, had been submitted to the CFIUS several times, but failed to allay concerns about the security of US customers' data.

"We hope the US can create a level playing field and predictable environment for Chinese enterprises to invest and start up businesses in the US," Chinese foreign ministry spokesman Geng Shuang said during a regular news briefing in response to a question about the deal.

Controlled by Ma, Ant Financial -- which provides mobile payment, lending and credit services to a mostly Chinese clientèle -- has looked to expand abroad along with Alibaba, China's largest e-commerce platform.

Nasdaq-listed MoneyGram's shares sank in after-hours trading.

The two companies will still look to cooperate in other ways despite the setback, Doug Feagin, president of Ant Financial International, said in a statement.

"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."

The news comes almost a year after Ma met then-President-elect Donald Trump, promising to bring a million jobs to the US.

The personal relationship did not sway the Trump Administration, though, which has launched a number of anti-dumping trade cases against China and is in the process of investigating it over intellectual property issues.

The administration labelled China a "revisionist" power last month.

The CFIUS, which reviews all foreign takeovers of US firms with potential national security concerns, has squashed a number of Chinese purchases of US businesses in recent years, as concern grows in Washington about selling critical technology to China.

In September, Trump blocked the sale of Oregon-based Lattice Semiconductor to private equity firm Canyon Bridge, its Chinese partner Yitai Capital and Yitai's parent the China Venture Capital Fund Corp over national security concerns.

The CFIUS has also thwarted takeovers of US chip makers Micron Technology and Sandisk by state-owned Tsinghua Unigroup.

Source: AFP