Notice of Working Mechanism for the Banking Financial Institutions in Shanghai to Prevent Illegal Fund-Raising

 2018-06-11  24


Notice of the General Office of the Shanghai Office of the China Banking Regulatory Commission on Issuing the Working Mechanism for the Banking Financial Institutions in Shanghai to Prevent Illegal Fund-Raising (for Interim Implementation)


· Document Number:No. 134 [2016] of the General Office of the Shanghai Office of the China Banking Regulatory Commission

· Area of Law: Banking & Finance

· Level of Authority: Local Regulatory Documents

· Date issued:06-20-2016

· Effective Date:06-20-2016

· Status: Effective

· Issuing Authority: China Banking Regulatory Commission, Shanghai Bureau

 

Notice of the General Office of the Shanghai Office of the China Banking Regulatory Commission on Issuing the Working Mechanism for the Banking Financial Institutions in Shanghai to Prevent Illegal Fund-Raising (for Interim Implementation)
(No. 134 [2016] of the General Office of the Shanghai Office of the China Banking Regulatory Commission)
All banking financial institutions in Shanghai:
Under the requirement and spirit of the Opinions on the Implementation of Further Effectively Preventing and Disposing Illegal Fund-Raising (No. 196 [2015], CBRC) and the Notice on Effectively Conducting the Monitoring and Early Warning of Illegal Fund-Raising by the Banking Financial Institutions (No. 59 [2016], CBRC) as issued by the China Banking Regulatory Commission, and the Notice on Issuing the Opinions of Shanghai Municipality on the Implementation of Further Effectively Preventing and Disposing Illegal Fund-Raising (No. 19 [2016], the People's Government of Shanghai Municipality) as issued by the People's Government of Shanghai Municipality, on the basis of the working mechanisms of all institutions, the Shanghai Office of the China Banking Regulatory Commission drafted the Working Mechanism for the Banking Financial Institutions in Shanghai to Prevent Illegal Fund-Raising (for Interim Implementation), which is hereby issued to you for your conscientious study and implementation. If any problem is encountered during the implementation, please feed it back to the Shanghai Office of the China Banking Regulatory Commission in a timely manner.

General Office of the Shanghai Office of the China Banking Regulatory Commission
June 20, 2016
The Working Mechanism for the Banking Financial Institutions in Shanghai to Prevent Illegal Fund-Raising (for Interim Implementation)[(end)]
Chapter I General Provisions
Article 1 This Working Mechanism is developed for the purpose of further preventing illegal fund-raising, defining job-related powers and duties, regulating work procedures and improving work efficiency, according to the work policy of "defined responsibilities, interactions between upper and lower levels, joint efforts in regulation and management, and effective cooperation" determined by the State Council, under the requirement and spirit of the Opinions on the Implementation of Further Effectively Preventing and Disposing Illegal Fund-Raising (No. 196 [2015], CBRC) and the Notice on the Effectively Conducting the Monitoring and Early Warning of Illegal Fund-Raising by the Banking Financial Institutions (No. 59 [2016], CBRC) as issued by the China Banking Regulatory Commission, and the Notice on Issuing the Opinions of Shanghai Municipality on the Implementation of Further Effectively Preventing and Disposing Illegal Fund-Raising (No. 19 [2016], the People's Government of Shanghai Municipality) as issued by the People's Government of Shanghai Municipality.
Article 2 For the purpose of this Working Mechanism, "illegal fund-raising" means the absorption of funds from the general public by a legal person, any other organization or individual in violation of laws, regulations and provisions on the state financial administration, which shall satisfy concurrently all the four following characteristic essential elements:
(1) absorbing funds without the legal approval of the relevant department or under the disguise of lawful business operations;
(2) publicizing by means of media, recommendation fairs, leaflets or mobile phone text messages, etc.;
(3) promising to repay the principal and interests or make payments in the form of currency, real objects, equities, etc. within a certain time limit; and
(4) absorbing funds from the general public, i.e. unspecified people.
Whoever absorbs funds from his relatives, friends or specific person within an entity without publicity in the society shall not be deemed to have met the condition of absorbing public savings illegally or in disguised form.
Article 3 The banking financial institutions shall observe the following principles in the prevention of illegal fund-raising:
(1) establishing and improving a responsibility system to prevent illegal fund-raising, and establishing and improving a system of appraisal, punishment, reward and accountability;
(2) establishing and improving a working mechanism to monitor and issue early warning of illegal fund-raising, and defining clue collection, record analysis, identification and judgment, report transfer, and other work process;
(3) establishing and improving a publicity and education mechanism, and, in close combination of routine publicity and concentrated publicity, promoting the regularization and systematization of publicity and education; and
(4) establishing a multiple-party cooperation mechanism, strengthening the communication with the Office of the Shanghai Leading Group of the Crackdown on Illegal Financial Activities, the public security and judicial departments of Shanghai, news media, etc., and form joint prevention forces.
Chapter II Organizational System
Article 4 A banking financial institution shall establish a leading group for the prevention of illegal fund-raising (hereinafter referred to as "Group"), and the person in charge of the institution shall act as group leader.
Article 5 An general office shall be established under the Group, specifying the leading department and specific person in charge, and overall arranging and coordinating the prevention of illegal fund-raising. The main responsibilities of the leading department shall include:
(1) making plans for the prevention of illegal fund-raising, and establishing and improving a working mechanism to prevent illegal fund-raising;
(2) promoting the publicity and education with regard to the prevention of illegal fund-raising in the whole bank (company);
(3) based on the new situation and new characteristics of illegal fund-raising, determining key preventions and promoting routine inspections and follow-up rectification;
(4) based on the latest requirement of regulatory departments, urging and guiding Group members and branches in implementing funds monitoring and the monitoring of public opinions, and cooperating with relevant departments in effectively investigating and controlling accounts involved in cases, etc.; and
(5) in respect of suspected clues involving illegal fund-raising, differentiating between clients and employees and reporting to different departments in a timely manner.
Article 6 All Group members shall cooperate with the leading department in advancing the implementation of the work regarding to the prevention of illegal fund-raising, timely summarize suspicious clues that any employee of the bank (company) is discovered in routine work to be involved in illegal fund-raising, and provide assistance in the follow-up work.
Chapter III Monitoring and Early Warning
Article 7 A banking financial institution shall monitor and issue early warning of the situation where any client or employee is suspected of illegal fund-raising, and collect, analyze, identify and report any clue suspected of illegal fund-raising.
(1) A banking financial institution shall strengthen account management, and, on the basis of the strict implementation of the suspicious large-sum funds report system, analyze and identify all types of abnormal changes of funds in account transactions suspected of illegal fund-raising. Attention shall be paid in priority to the following, but not limited to, any of the following suspicious transactions: Separate inward transfer and concentrated outward transfer of funds within a short term, with any abnormality in amount, frequency, direction, etc. of transactions; regular or irregular outward transfer in batch from one account to other accounts, with the characteristics of payment of interests; abrupt funds flow into the account, in which the flow of funds is small usually, and there are a large number of fund receipts and payments within a short term; frequent receipt of remittances within a short term that are obviously irrelevant to the business of a legal person or any other organization as the recipient, or a natural-person account's frequent receipt of remittances from a legal person or any other organization within a short term; large-sum funds transferred into an account opened in personal name are transferred to other persons' accounts within a short term; and at an outlet of a banking financial institution or the outlets of banking financial institutions in a certain area within a short term, accounts are opened in concentration, and funds are deposited and transferred out in concentration.
(2) Banking financial institutions shall strengthen the supervision and management of the abnormal acts of their employees. Attention shall be paid in priority to the following, but not limited to: Privately making investment or wealth management on behalf of clients in the name of the institution or by taking advantage of the identity as an institution employee; authorizing clients of the bank (company) to make investment or wealth management on behalf of any employee; handling in violation of provisions account opening, saving deposit, bill discount, and other business on behalf of clients; lending personal accounts or using personal accounts of clients to transit funds; providing guarantee to private finance; acting as a go-between for private finance; establishing, holding shares, or participating in the business of guarantee companies, small loan companies, Internet lending platforms, third-party wealth management (assets management) institutions, and other financing intermediary agencies, or acting as actual capital contributor or controller of financing intermediary agencies; and frequent large-sum funds transactions with clients, guarantee company, small loan companies, Internet lending platforms, third-party wealth management (assets management) institutions, etc.
Article 8 The banking financial institutions shall establish and improve a public opinion monitoring mechanism to monitor the advertisements and news institution involving them on newspapers, periodicals, radio, television, the Internet and other media, and the information revealed by media on them and their employees suspected of illegal fund-raising, and throughly search the street stores, office building, and other key areas near their outlets, so as to timely and accurately master whether Internet P2P lending platforms and other Internet enterprises conduct false advertising in the name of bank without permission, and other information. Once discovering such circumstances, all institutions shall voluntarily protect their rights. On one hand, they shall call relevant departments in Shanghai via report and complaint hot-line; on the other hand, they shall timely negotiate with such enterprises, request them to cease tortuous acts by sending lawyer's letters or other means, and protect the rights and interests of the institutions and their clients.
Article 9 The banking financial institutions shall monitor clues on illegal fund-raising, including the following process:
(1) collection of information: the banking financial institutions shall strengthen the monitoring of the funds in the accounts of the clients opened at banks, attention shall be paid in priority to the abnormal funds flow of enterprises, and in the case of remittances involved, remittance abstract, name of enterprise, accounts, and other factors shall be closely watched. The monitoring of employees' abnormal acts shall be strengthened, attention shall be paid in priority to the abnormal funds flows of employees, the innovation on the screening means shall be conducted, the anti-money laundering system, internal audit platforms, direction of large-sum funds flow, and other off-site early warning systems shall be made full use of, specific early warning rules shall be set, and suspicious clues may be collected based on early warning information;
(2) record analysis: through one-by-one comparison and one-by-one screening of records of abnormal transaction of funds in accounts, the essential accounts keeping characteristics of enterprises shall be summarized, and suspicious clues shall be specifically analyzed; and
(3) identification and judgment: the banking financial institutions shall, based on the essential characteristic elements, identify and assess the abnormal transaction of funds and clues thereon, including but not limited to: firstly, judging whether the rate of return exceeds largely the average social interest rate at the same period; secondly, from the perspective of scope, judging whether funds are absorbed from uncertain general public, and by "one-to-many" means; thirdly, from the perspective of the direction of funds flow, judging who use raised funds; fourthly, from the perspective of the scope of enterprise business, judging whether it exceeds the scope of enterprise business registered with the administrative department for industry and commerce; and fifthly, from the perspective of the statements and reports, judging whether funds in transactions are contrary to statements and reports.
Chapter IV Report on Clues
Article 10 The banking financial institutions shall, according to the standards with regard to the determination of suspicious transactions in the Measures for the Administration of Large-Sum and Suspicious Transactions of Financial Institutions, conscientiously analyze transactions with abnormal circumstances in amount, frequency, direction, nature, etc. Where, upon analysis, illegal fund-raising is suspected, and key suspicion report standard is met, on the basis of the report on the key suspicious transactions to the the People's Bank of China, report shall be made based on the different circumstances with regard to the clients and institution employees involved in illegal fund-raising clues.
Article 11 The banking financial institutions shall provide in a timely manner the clues on the clients suspected of illegal fund-raising as discovered through monitoring to the Office of the Shanghai Leading Group of the Crackdown on Illegal Financial Activities ("Municipal Financial Service Office"). The illegal fund-raising clues involving the employees of the institutions shall in a timely manner be reported to the bank (cooperative or company) at a higher level and the Shanghai Office of the CBRC; In the case of any suspected crime, report shall in accordance with the law be made to the public security department or procuratorial department.
Article 12 A report on suspicious illegal fund-raising clues shall include:
(1) detailed information on the suspicious clues, including but not limited to the accounts opened at banks and basic information of the suspicious enterprise and legal representative or contact person of the enterprise;
(2) initial judgment of the suspicious clues, including but not limited to the analysis of transaction records and abnormal changes of the funds accounts of the suspicious enterprise, the number of victims, amount, etc. possibly involved. In particular, the transaction records of accounts shall include date, amount, abstract, accounts of counterparties, names of counterparties, and opening banks of counterparties; and
(3) measures the institution has taken.
Article 13 The banking financial institutions shall establish ledgers for the transfer of reports on clues of suspected illegal fund-raising, register the detailed information on the transfer of reports on suspicious clues, and uniformly keep them as archives.
Article 14 The banking financial institutions shall, upon the submission of the reports on suspicious illegal fund-raising clues, cooperate with the Office of the Shanghai Leading Group of the Crackdown on Illegal Financial Activities (Municipal Financial Service Office), public security, judicial departments, etc. in effectively conducting the follow-up investigation, evidence collection, debt registration, and other work, and report the follow-up development in a timely manner.
Chapter V Publicity and Education
Article 15 The banking financial institutions shall effectively publicize the prevention of illegal fund-raising, and conscientiously perform the obligation of the publicity and education with regard to the prevention of illegal fund-raising. In close combination of routine publicity and concentrated publicity, foreign publicity and domestic publicity shall be effectively conducted to guide employees and the public in raising the awareness of law and improve their ability of identification, and voluntarily staying away from illegal fund-raising, so as to contain the spread of illegal fund-raising from the root.
Article 16 The banking financial institutions shall strengthen routine publicity, make full use of the three teams of bank tellers, customer service personnel and wealth (lobby) managers, overall arrange the resources of three sites (outlet video, official WeChat account of the bank, and outlet lintel board), three tools (ATM, online bank/mobile bank application, and all types of statement of accounts), and three meetings (morning meeting, week meeting and training session of business outlets), constantly strengthen the education on the financial knowledge and risk warning for the public, and improve the public ability to identify fraud and prevent illegal fund-raising.
Article 17 The banking financial institutions shall conduct concentrated publicity, take the opportunities of the "March 15th International Day for Protecting Consumers' Rights," "concentrated publicity month," and other campaigns, and make use of newspapers, television, radio, the Internet and other media to publicize in concentration from multiple dimensions and multiple perspectives the forms of expression and characteristics of illegal fund-raising, raise the profile of typical cases, make detailed publicity and education plans, and promote the implementation thereof.
Article 18 The banking financial institutions shall strengthen the education for employees, and, in combination of "30 prohibitions" and "four prohibitions and eight don'ts" regarding to case prevention and operating risks, "the important risky points and measures for the prevention of operating risks of the banking financial institutions", and other regulatory provisions, raise the employees' awareness of the compliance with regulations and disciplines, and the prevention of illegal fund-raising risks.
Chapter VI Appraisal Mechanism
Article 19 The banking financial institutions shall establish an appraisal system to prevent illegal fund-raising, specify responsibilities and division of work as to prevention and control of risks, publicity and evaluation, monitoring and warning, cooperation with relevant departments in effectively inspecting and controlling accounts involved in cases, etc., regularly appraise the prevention of illegal fund-raising, and make it an important constituent part of the appraisal of the business performance of the institutions.
Article 20 The banking financial institutions shall develop the measures for the reward regarding to the prevention of illegal fund-raising. Corresponding measures for the reward shall be specified. Branches (departments) and employees that provide clues on illegal fund-raising, and assist in the recovery of economic loss shall be recognized and rewarded, and positive incentives shall be enhanced to fully motivate employees to participate in the prevention and early warning.
Article 21 The banking financial institutions shall establish and improve an accountability mechanism to hold relevant persons for accountability in the case that such persons ineffectively performed their duties in the monitoring, early warning or the prevention of illegal fund-raising, failed to conduct the inspection which should have been conducted, failed to discovered the problems which should have been discovered, or failed to make a report on the problems on which they should have made a report in a timely manner.