China’s Banking Regulatory Authority Cracks Down on Illegal Activities
============================================================
The Chinese government has taken a significant step to maintain financial stability and protect the interests of depositors and other customers by granting sweeping powers to its banking regulatory authority. According to new measures, the authority can take swift action against banks that violate laws and regulations.
Measures to Maintain Financial Stability
The new measures allow the banking regulatory authority to:
- Terminate measures prescribed by previous paragraphs within three days after verification of compliance.
- Take over a bank or assist in its restructuring if it is experiencing or likely to experience a credit crisis, which could seriously prejudice the interests of depositors and other customers.
- Close down a bank that has been found to have serious violations of law and/or regulations, or significant unsafe or unsound practices that pose a grave danger to financial order or threaten public interests.
Powers to Regulate Bank Activities
The authority can also:
- Require directors, senior managers, and other staff of banks to perform their duties according to its requirements.
- Take measures against individuals directly responsible for a bank’s problems, including preventing them from leaving China or freezing their assets.
- Inspect deposit accounts and request freezing of funds in violation of regulations.
Investigation and Prosecution
The authority has been given the power to investigate and prosecute banking staff who commit crimes such as embezzlement, bribery, or divulgence of state or commercial confidential information.
Penalties for Violations
Banks found guilty of illegal activities will face penalties including:
- Fines ranging from 500,000 yuan to 2 million yuan.
- Suspension of business for consolidation or revocation of banking permits in serious cases.
Key Provisions
- The banking regulatory authority can terminate measures prescribed by previous paragraphs within three days after verification of compliance.
- Banks found to be in breach of regulations will face swift action, including takeover, restructuring, or closure.
- Directors, senior managers, and other staff of banks must perform their duties according to the authority’s requirements.
- Individuals directly responsible for a bank’s problems may be prevented from leaving China or have their assets frozen.
These measures aim to maintain financial stability and protect the interests of depositors and other customers. They come into effect immediately.