Circular of the General Office of the State Council on Issuing the Implementing Proposals for the Special Rectification of Internet Financial Risks
Circular of the General Office of the State Council on Issuing the Implementing Proposals for the Special Rectification of Internet Financial Risks
Circular of the General Office of the State Council on Issuing the Implementing Proposals for the Special Rectification of Internet Financial Risks
Guo Ban Fa [2016] No.21
April 12, 2016
People's governments of all provinces, autonomous regions and municipalities directly under the Central Government, and all ministries and commissions under and all institutions directly under the State Council,
The Implementing Proposals for the Special Rectification of Internet Financial Risks have been approved by the State Council and are hereby issued to you for your earnest implementation.
Implementing Proposals for the Special Rectification of Internet Financial Risks
Standardizing the development of internet finance, an important initiative of the State for speeding up the innovation-driven development strategy and promoting the transformation and upgrading of the economic structure, is of great significance to improving public interests brought by financial services in China and promoting popular entrepreneurship and innovation. Upon approval by the Central Committee of the Communist Party of China (the "CPC") and the State Council, the People's Bank of China and other nine departments jointly issued in July 2015 the Guiding Opinions on Promoting the Healthy Development of Internet Finance (hereinafter referred to as the "Guiding Opinions"); the relevant departments have taken timely action to crack down on a batch of cases on internet financial risks involving significant illegal turnover, broad coverage, and great social harm, with favorable social reflection. These Implementing Proposals for the Special Rectification of Internet Financial Risks (hereinafter referred to as the "Proposals") are formulated in order to implement the decisions and arrangements of the CPC Central Committee and the State Council, encourage and protect genuinely valuable innovation in internet finance, rectify illegalities and irregularities, effectively prevent risks, develop a long-standing supervision mechanism, and promote the standard and orderly development of internet finance.
I. Working Objectives and Principles
1. Working objectives.
Our working objectives are to realize the balance between regulation and development and between innovation and risk prevention, promote the sound and sustainable development of internet finance, and effectively give play to the active role of internet finance in supporting popular entrepreneurship and innovation, by implementing the requirements of the Guiding Opinions, standardizing all forms of internet finance, optimizing the environment of market competition, reversing the situation that certain forms of internet finance deviate from the right direction of innovation, curbing the frequent occurrence of cases on internet financial risks, improving investors' awareness about risk prevention, and developing and perfecting a long-standing supervision mechanism adapted to the development features of internet finance.
(2) Working principles.
Crack down on illegalities and protect lawful behaviors. We should make clear the boundary between legality and illegality and between regularity and irregularity in all business, and keep the bottom line of abiding by laws and preventing risks. Protection and support should be given to legal and regular behaviors, while illegalities and irregularities should be resolutely combated.
Proceed with the work actively yet prudently, and tackle problems in an orderly manner. We should carry out the work slowly yet surely, with attention paid to methods and steps. Key problems should be clarified and classified for solutions according to different risk areas. Illegalities and irregularities should be treated differently according to their circumstances and social harm. Risks should be assessed properly and disposed of in a lawful, orderly, and reliable manner, to prevent the risk in risk disposal. Meanwhile, it is imperative to insist on fair and impartial rectification, without exceptions.
Define duties of different departments while strengthening inter-departmental collaboration. Responsibilities should be defined according to the duties of departments, the division of duties as specified in the Guiding Opinions and requirements hereof, and the nature of services and by adopting insightful supervision methods. Various illegalities and irregularities should be rectified effectively by adhering to the problem-oriented principle, and focusing efforts on current major risk areas of internet finance. Taking features of internet financial activities into full consideration, different departments and regions should strengthen the collaboration between them and jointly undertake the rectification task and perform the rectification responsibility.
Rectify and correct risks for both the long term and short term. Risks existing in the internet finance areas should be prevented and tackled effectively based on the current situation, to form an effective deterrent against illegalities and irregularities. In the long term, by taking the special rectification as an opportunity and summarizing experience in a timely manner, systems and rules will be formed and a long-standing supervision mechanism for internet finance will be developed and perfected.
II. Key Problems to Be Rectified and Work Requirements
1. Online P2P lending and equity-based crowdfunding.
(1) An online P2P lending platform shall observe laws and policies and act as an information intermediary, and shall not set up any capital pool, nor shall it issue loans, raise funds illegally, obtain financing which is guaranteed by it, make promises on behalf of clients of principal and interest guarantees, maturity mismatches, maturity splits, false advertising, or fictional products, mislead lenders by fabricating or exaggerating prospects for earnings or otherwise, or engage in offline marketing apart from the collection and verification of credit information, follow-up tracking of goods, mortgage or pledge management.
(2) An equity-based crowdfunding platform shall not issue false underlying products, raise funds for itself, or with debts actually while claiming to do so with equity, or in violation of provisions in disguised form. It shall reinforce the obligation to disclose information to borrowers and the platform and the requirements of protecting shareholders' equity, and shall not make misrepresentations or release misleading propaganda.
(3) An online P2P lending platform or equity-based crowdfunding platform shall not engage in asset management, claims or equity transfer, capital allocation in the high-risk securities market, or other financial business without approval. Clients' funds and proprietary funds on an online P2P lending platform or equity-based crowdfunding platform should be managed under different accounts. By following the principle of specialized operation, and strictly implementing the requirements of keeping clients' funds in the custody of a third party, an eligible banking financial institution should be selected to serve as the depository of funds for protecting the safety of clients' funds.
......
Guo Ban Fa [2016] No.21
April 12, 2016
People's governments of all provinces, autonomous regions and municipalities directly under the Central Government, and all ministries and commissions under and all institutions directly under the State Council,
The Implementing Proposals for the Special Rectification of Internet Financial Risks have been approved by the State Council and are hereby issued to you for your earnest implementation.
Implementing Proposals for the Special Rectification of Internet Financial Risks
Standardizing the development of internet finance, an important initiative of the State for speeding up the innovation-driven development strategy and promoting the transformation and upgrading of the economic structure, is of great significance to improving public interests brought by financial services in China and promoting popular entrepreneurship and innovation. Upon approval by the Central Committee of the Communist Party of China (the "CPC") and the State Council, the People's Bank of China and other nine departments jointly issued in July 2015 the Guiding Opinions on Promoting the Healthy Development of Internet Finance (hereinafter referred to as the "Guiding Opinions"); the relevant departments have taken timely action to crack down on a batch of cases on internet financial risks involving significant illegal turnover, broad coverage, and great social harm, with favorable social reflection. These Implementing Proposals for the Special Rectification of Internet Financial Risks (hereinafter referred to as the "Proposals") are formulated in order to implement the decisions and arrangements of the CPC Central Committee and the State Council, encourage and protect genuinely valuable innovation in internet finance, rectify illegalities and irregularities, effectively prevent risks, develop a long-standing supervision mechanism, and promote the standard and orderly development of internet finance.
I. Working Objectives and Principles
1. Working objectives.
Our working objectives are to realize the balance between regulation and development and between innovation and risk prevention, promote the sound and sustainable development of internet finance, and effectively give play to the active role of internet finance in supporting popular entrepreneurship and innovation, by implementing the requirements of the Guiding Opinions, standardizing all forms of internet finance, optimizing the environment of market competition, reversing the situation that certain forms of internet finance deviate from the right direction of innovation, curbing the frequent occurrence of cases on internet financial risks, improving investors' awareness about risk prevention, and developing and perfecting a long-standing supervision mechanism adapted to the development features of internet finance.
(2) Working principles.
Crack down on illegalities and protect lawful behaviors. We should make clear the boundary between legality and illegality and between regularity and irregularity in all business, and keep the bottom line of abiding by laws and preventing risks. Protection and support should be given to legal and regular behaviors, while illegalities and irregularities should be resolutely combated.
Proceed with the work actively yet prudently, and tackle problems in an orderly manner. We should carry out the work slowly yet surely, with attention paid to methods and steps. Key problems should be clarified and classified for solutions according to different risk areas. Illegalities and irregularities should be treated differently according to their circumstances and social harm. Risks should be assessed properly and disposed of in a lawful, orderly, and reliable manner, to prevent the risk in risk disposal. Meanwhile, it is imperative to insist on fair and impartial rectification, without exceptions.
Define duties of different departments while strengthening inter-departmental collaboration. Responsibilities should be defined according to the duties of departments, the division of duties as specified in the Guiding Opinions and requirements hereof, and the nature of services and by adopting insightful supervision methods. Various illegalities and irregularities should be rectified effectively by adhering to the problem-oriented principle, and focusing efforts on current major risk areas of internet finance. Taking features of internet financial activities into full consideration, different departments and regions should strengthen the collaboration between them and jointly undertake the rectification task and perform the rectification responsibility.
Rectify and correct risks for both the long term and short term. Risks existing in the internet finance areas should be prevented and tackled effectively based on the current situation, to form an effective deterrent against illegalities and irregularities. In the long term, by taking the special rectification as an opportunity and summarizing experience in a timely manner, systems and rules will be formed and a long-standing supervision mechanism for internet finance will be developed and perfected.
II. Key Problems to Be Rectified and Work Requirements
1. Online P2P lending and equity-based crowdfunding.
(1) An online P2P lending platform shall observe laws and policies and act as an information intermediary, and shall not set up any capital pool, nor shall it issue loans, raise funds illegally, obtain financing which is guaranteed by it, make promises on behalf of clients of principal and interest guarantees, maturity mismatches, maturity splits, false advertising, or fictional products, mislead lenders by fabricating or exaggerating prospects for earnings or otherwise, or engage in offline marketing apart from the collection and verification of credit information, follow-up tracking of goods, mortgage or pledge management.
(2) An equity-based crowdfunding platform shall not issue false underlying products, raise funds for itself, or with debts actually while claiming to do so with equity, or in violation of provisions in disguised form. It shall reinforce the obligation to disclose information to borrowers and the platform and the requirements of protecting shareholders' equity, and shall not make misrepresentations or release misleading propaganda.
(3) An online P2P lending platform or equity-based crowdfunding platform shall not engage in asset management, claims or equity transfer, capital allocation in the high-risk securities market, or other financial business without approval. Clients' funds and proprietary funds on an online P2P lending platform or equity-based crowdfunding platform should be managed under different accounts. By following the principle of specialized operation, and strictly implementing the requirements of keeping clients' funds in the custody of a third party, an eligible banking financial institution should be selected to serve as the depository of funds for protecting the safety of clients' funds.
......