Relevant Laws and Regulations on Financial Supervision in China

China's financial laws on financial supervision mainly include:

People's Bank of China Law, Commercial Bank Law, Bills Law, Guarantee Law, Insurance Law, Securities Law, Trust Law, Securities Investment Fund Law, Banking Supervision and Administration Law;

Financial laws and regulations include:

Regulations on the Administration of Savings, Regulations on the Administration of Corporate Bonds, Regulations on the Administration of Foreign Exchange, Measures for the Suppression of Illegal Financial Institutions and Illegal Financial Business Activities, and Measures for the Punishment of Financial Violations.

Regulations on the Administration of the Renminbi, Provisional Regulations on the Supervisory Boards of Key State-owned Financial Institutions, and Provisions on the Real-Name System for Individual Deposit Accounts.

Regulations on Financial Asset Management Companies, Regulations on the Revocation of Financial Institutions, Regulations on Foreign-funded Insurance Companies, Regulations on Foreign-funded Banks, Regulations on the Administration of Futures Trading.

The Interim Measures for the Administration of Bond Issuance by Central Enterprises, the Regulations on the Disposal of Risks of Securities Companies, and the Regulations on the Supervision and Administration of Securities Companies.

Expanded Information:

Financial supervisory system is the division of responsibilities and allocation of power in financial supervision The main international financial regulatory regimes are The main international financial regulatory system can be divided into two lines of multiple regulatory system, a line of multiple regulatory system and a single regulatory system.

The financial regulatory system is a product of the history and national conditions of each country. The basic principle of establishing the model of regulatory system is to improve the efficiency of regulation, avoid excessive cross responsibilities and mutual constraints, but also pay attention to the mutual constraints of power and avoid excessive concentration of power.

In the case of the relative concentration of regulatory power in a regulatory body, it is necessary to implement a scientific and reasonable internal division of power and division of responsibilities to ensure the proper exercise of regulatory power.

On April 27, 2018, the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions" was formally released, which is referred to as the "New Regulations on Asset Management" in the industry.

The establishment of major policy standards such as breaking rigid payment, banning multi-layer nesting, and suppressing channel business in the new regulations on asset management will drive the development of the asset management industry back to its roots, and the licensed institutions that focus on sound investment strategies will usher in a major strategic benefit.

The country wants to develop the economy, first of all, is the problem of money, with money, government agencies will be able to pay civil servants, the country's policies can be implemented, and money has to do with the national institutions are divided into two categories - financial institutions and government agencies.

1, financial institutions

In the financial institutions, the State Council is the big boss, he has three financial institutions under him - the central bank, the CBI, the Securities and Exchange Commission.

(1) People's Bank of China

The People's Bank of China, or the Central Bank for short. Her daily work is to issue banknotes, regulate the circulation of money, and direct banking operations. Of these, directing banking is important because the major banks touch money directly, and the banks themselves are divided into policy banks and commercial banks.

Policy banks - non-profit institutions, the country wants to engage in construction to find it a loan;

Commercial banks - for-profit institutions, and the people are closely related to, such as the four major banks: Agricultural Bank of China, Industrial and Commercial Bank of China, Bank of China, China Construction Bank.

The main management of the above institutions is the yuan, foreign currency is also the central bank tube, but she gave the job to the foreign exchange bureau, specializing in the management of foreign exchange.

(2) CBIRC

The People's Bank of China (PBOC) mainly relies on the banks to send work to regulate the economy, then the institutions that regulate the banks should be mentioned in the CBIRC, which mainly manages the day-to-day operations of the banks, such as the bank wants to open a branch, the bank's internal executive changes, etc. The PBOC also manages the non-financial institutions. The CBI also manages non-bank financial institutions and insurance organizations.

In 2018, the two Councils merged the CBRC and the CIRC into the CBI, because China's financial model has changed, stepping into the era of the development of mixed business operations, the cross-operation between the various businesses is extremely frequent, the regulatory overlap, regulatory vacuum and other problems are serious, and some of the newer financial institutions, such as the wealth companies, need the coordination of the two regulatory bodies, or else they will produce a regulatory blind spot.

The central bank and the CBI have a lot of business intersections, usually often cooperate, but the specific work is still different, the central bank is the business guidance, the CBI is the regulatory operation.

(3) Securities and Futures Commission

Stocks, funds, futures, these terms are familiar to investors, I'm afraid, to be able to operate these business organizations are elite in the elite, referred to as "elite in the British". Management of these institutions is not good, the stability of the financial market will be affected by the unprecedented. The management of them is the Securities and Futures Commission (SFC).

An example: if a company wants to go public, he needs to go to the Securities and Exchange Commission for approval, and only with the approval of the Commission, the stock exchange will be ready for the company to issue shares.

The central bank, the CBI, and the SEC each have their own duties and responsibilities, and they are all on an equal footing. They, then, are the national system of financial institutions.

2, government agencies

The government also has to have its own department of money management, otherwise how to deal with the taxes collected? How are civil servants paid? It is called the Ministry of Finance, and its main responsibilities are to set tax policy, issue national debt, and manage government revenue and expenditure.

Because it's a national institution, the ministry's structure is typical of a government -- provincial capitals have finance departments and local municipalities have finance bureaus.

Their working model is also simple: the ministry sets policies, the finance department implements them, and the finance bureau follows through.

3, the relationship between the central bank and the Ministry of Finance

Central bank and the Ministry of Finance are under the leadership of the State Council, the central bank to manage the monetary policy, the Ministry of Finance to manage the fiscal policy.

When the state wants to manage the economy, the need for the two institutions to cooperate, such as in recent years, "deleveraging", the central bank to let the banks "tighten", that is, less money to lend to enterprises, the Ministry of Finance to follow up "tighten", that is, to let the Ministry of Finance to follow up "tighten".

Summary of laws and regulations related to Internet finance:

According to the People's Bank of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Finance, the State Administration for Industry and Commerce, the Legislative Affairs Office of the State Council, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission.

The Guiding Opinions on Promoting the Healthy Development of Internet Finance (Yinfa [2015] No. 221, hereinafter referred to as the Guiding Opinions), which was jointly issued by the State Internet Information Office on July 28, 2015, provides that.

Currently, China's legal Internet financial industry includes: Internet payment, online lending, equity crowdfunding financing, Internet fund sales, Internet insurance and Internet trust and Internet consumer finance.

In addition to the traditional laws and regulations and regulatory systems and policies, the regulatory provisions specifically targeting new forms of business mainly began with the regulation of third-party payment institutions by the People's Bank of China No. 2 (Measures for the Administration of Payment Services for Non-Financial Institutions) in 2010 (it is generally believed that the development and regulation of payment business is also a landmark event for the development of China's Internet finance industry).

In 2015, ten ministries and commissions issued No. 221 ("Guiding Opinions") is not only a comprehensive summary of the Internet financial industry in recent years, sorting out and confirming, but also a programmatic, "guiding" document for the future landing of regulatory policies.

1, P2P network microcredit regulations

August 23, 2011, the CBRC issued the "notice on the relevant risks of everyone's loans," Banking Supervision Office [2011] 254, which pointed out that in the current situation of tightening bank credit, everyone's loans (PeertoPeer, referred to as P2P) credit services intermediary companies show rapid development.

These intermediary companies collect information on borrowers and lenders, evaluate borrowers' collateral, such as real estate, cars and equipment, and then make matches and collect intermediary service fees.

The operation and impact of such intermediary companies have been heavily reported by the relevant media, which has aroused concern from many quarters. In response, the CBRC organized a special study and found a large number of potential risks and warned of them.

This notice is just a risk warning document for Renren. At an inter-ministerial joint meeting of nine ministries to deal with illegal fund-raising held on Nov. 25, 2013, the central bank clearly defined illegal fund-raising in the P2P online lending industry.

There are three main types of situations: the capital pooling model; the risk of illegal fund-raising due to unqualified borrowers and Ponzi schemes.

2, third-party payment regulations

On June 4, 2010, the People's Bank of China issued Measures for the Administration of Payment Services for Non-Financial Institutions ([2010] No. 2), which stipulates in Article 1 that the purpose of the Measures is to promote the healthy development of the payment services market, regulate the behavior of payment services for non-financial institutions, prevent payment risks, and protect the legitimate interests of the parties concerned

The second article of the Measures specifies that the non-financial institution payment service referred to in these Measures refers to the non-financial institution that acts as an intermediary between the payee and the payer to provide some or all of the following monetary fund transfer services:

(1) network payment;

(2) issuance and acceptance of prepaid cards;

(3) bank card acquiring;

(4) Other payment services determined by the People's Bank of China.

The network payment referred to in the Measures refers to the transfer of monetary funds between the payee and the payer relying on the public **** network or a dedicated network, including currency exchange, Internet payment, cell phone payment, fixed-line phone payment, digital TV payment, etc..

The prepaid card referred to in this measure refers to the prepaid value of goods or services purchased outside the issuing organization issued for profit, including the adoption of magnetic stripe, chip and other technologies in the form of cards, passwords and other forms of prepaid cards issued.

Bank card acquiring, as referred to in the Measures, refers to the collection of monetary funds on behalf of bank card merchants through point-of-sale (POS) terminals and other special merchants. The Measures for the Administration of Payment Services for Non-Financial Institutions is an important regulatory statute for third-party payments.

3, virtual currency regulations

June 4, 2009, the Ministry of Culture and the Ministry of Commerce jointly issued the "Notice on Strengthening the Management of Virtual Currency in Online Games" (Wen Shi Fa [2009] No. 20), which stipulates that market access should be strict, and strengthened on the issuance of virtual currency in online games and the management of the main body of the online game virtual currency transaction services provided by the main body.

Engaged in the "online game virtual currency trading services" business must comply with the relevant provisions of the competent business department on e-commerce (platform) services. In addition to the use of legal tender purchase, online game operators shall not use any other way to provide users with online game virtual currency.

On July 20, 2009, the Ministry of Culture issued the "Guidelines for Declaring "Online Game Virtual Currency Issuing Enterprises" and "Online Game Virtual Currency Trading Enterprises" to provide guidance for the operation of Internet cultural units applying to engage in the "Online Game Virtual Currency Issuing Enterprises".

The Ministry of Culture issued the "Declaration Guidelines for "Online Game Virtual Currency Issuing Enterprises" and "Online Game Virtual Currency Trading Enterprises" to provide operable guiding rules for operating Internet cultural units to apply for engaging in the business of "online game virtual currency issuance services".

On September 28, 2008, the State Administration of Taxation ("SAT") clarified the tax treatment of virtual currencies in its Reply to the Issue of Individual Income Tax on the Income of Individuals Obtained from Virtual Currencies Sold and Purchased Through the Internet (Guo Shui Han [2008] No. 818), which states that the tax treatment of virtual currencies is to be determined by the SAT.

The income obtained by an individual from acquiring virtual currencies from players through the network and selling them to others at a higher price belongs to the taxable income of individual income tax, and should be calculated and paid in accordance with the item of "Income from Transfer of Property".

All in all, the introduction of a series of regulatory measures to make the regulation of virtual currency has been further clarified, but the regulatory measures are still only limited to the game of virtual currency.

4, crowdfunding regulations

The U.S. Securities and Exchange Commission (SEC) recently approved a draft regulation of crowdfunding, crowdfunding for the public at the beginning of 2012 to promote entrepreneurial business financing bill (JumpstartOurBusinessStartupsAct, referred to as the JOBS Act) recognized .

That is, raising funds for various projects, causes and even companies on the Internet is recognized by law. This is an important measure for the U.S. government to regulate crowdfunding.

On September 16, 2013, the China Securities Regulatory Commission (CSRC) notified some companies on Taobao of suspected unauthorized stock offerings and called them off.

The stoppage was based on the "Circular of the General Office of the State Council on Cracking Down on Issues Related to Illegal Stock Issuance and Illegal Operation of Securities Business" (Guo Ban Fa [2006] No. 99), which stipulates that "it is strictly forbidden for shareholders of any company to transfer shares to the public by themselves or by entrusting others to do so in a public manner".

Since then, what has been called Chinese-style "crowdfunding," or the use of online platforms to issue shares to the public, has been defined for the first time as an "illegal securities activity.

While the crowdfunding model is conducive to solving the stubborn problem of financing difficulties for small and medium-sized enterprises, domestic crowdfunding websites cannot simply copy the U.S. model, but must come out of a crowdfunding road that suits China's national conditions before it becomes more relevant, given the current legal framework.

Based on the "Supreme People's Court on the trial of criminal cases of illegal fund-raising specific application of the law on a number of issues of the Interpretation," the crowdfunding model in the form of almost easy to press the red line of illegal.

That is, unauthorized, public recommendation through the website, the promise of a certain return, to the unspecified object to absorb funds, constituting illegal fund-raising behavior.

The United States for crowdfunding legislation, we can learn from the U.S. JOBS Act to regulate the crowdfunding model, but also subject to a gradual process.

5, Internet insurance regulations

September 20, 2011, the China Insurance Regulatory Commission issued the "China Insurance Regulatory Commission on the issuance of" insurance agents, brokers Internet insurance business supervision methods (for trial implementation) "notice of the insurance supervision and issuance of [2011] No. 53)".

The purpose of the Measures is to promote the standardized, healthy and orderly development of the Internet insurance business of insurance agents and brokers, and to effectively protect the legitimate rights and interests of policyholders, insured persons and beneficiaries.

In May 2012, the China Insurance Regulatory Commission (CIRC) issued the Announcement on Prompting the Risks of Internet Insurance Business (CIRC Announcement [2012] No. 7), which provided risk reminders to the majority of policyholders regarding the Internet insurance industry.

In addition, on April 15, 2011, the CIRC issued the "Internet Insurance Business Supervision Provisions (Exposure Draft)", and the Internet insurance supervision provisions will be further improved in the near future.

In short, the Internet financial innovation is endless, the innovation of Internet finance means the emergence of new financial models, also means the need for new regulatory regulations.

Moreover, the current regulatory regulations of Internet finance are not yet perfect, some Internet financial models have emerged, but the relevant regulatory provisions are still in a lagging state, that is, the regulatory gap. Expect the regulatory authorities to improve the supervision of Internet finance-related areas as soon as possible.

6. Internet Banking Regulations

On June 29, 2001, the People's Bank of China issued the Interim Measures for the Administration of Internet Banking Business, but it was repealed in 2007 On January 26, 2006, the China Banking Regulatory Commission (CBRC) issued the Measures for the Administration of E-banking Business (CBRC Decree No. 5 of 2006).

The e-banking business referred to in the Measures refers to the banking services provided by commercial banks and other banking financial institutions to their customers by utilizing communication channels or open public networks open to the public, as well as dedicated networks established by banks for specific self-service facilities or customers.

Electronic banking services include banking services utilizing computers and the Internet (hereinafter referred to as Internet banking services), and banking services utilizing voice devices such as telephones and telecommunications networks (hereinafter referred to as telephone banking services).

Banking business conducted using cell phones and wireless networks (hereinafter referred to as cell phone banking business), and other banking business that utilizes electronic service equipment and networks, and in which customers complete financial transactions through self-service.

The Measures for the Administration of Electronic Banking Business is an important regulatory statute for Internet banking.

Ministry of Justice - Measures for the Administration of E-Banking Business

NLIC - Yinfa [2016] No. 113

Ministry of Justice - Issuance of Guiding Opinions on Improving the Supervision of Systemically Important Financial Institutions