The Shanghai Head Office of the People's Bank of China (“PBC”); all branches and operation offices of the PBC; all central sub-branches of the PBC in capital cities of provinces (autonomous regions) and sub-provincial cities; all state-owned commercial banks and joint-stock commercial banks; and the Postal Savings Bank of China:
At present, the problem of illegal fund-raising has become increasingly prominent, the number of cases has risen sharply, and the amount involved surges to new highs again and again, seriously jeopardizing the interests of the people and seriously affecting financial stability. For the purpose of further implementing the Opinions of the State Council on Further Effectively Preventing and Handling Illegal Fund-Raising (No. 59 [2015], State Council), and establishing and improving the monitoring and early warning system for illegal fund-raising, the following guiding opinions on further strengthening the monitoring and early warning of suspected illegally raising fund transactions are hereby put forward:
I. Attaching great importance to the monitoring and early warning of suspected illegally raising fund transactions
Monitoring and early warning is an important basis for preventing and handling illegal fund-raising. Document No. 59 [2015] of the State Council requests that monitoring and early warning shall be comprehensively strengthened, and a three-dimensional, socialized and informationized early warning system shall be established. Financial institutions are the most primary channels for the transfer and distribution of illegally raising funds. The monitoring of anti-money laundering fund transactions focusing on financial institutions is an important part of the illegal fund-raising monitoring and early warning system. Earlier discovery and handling is of great significance for prevention and early warning of illegal fund-raising risks. All financial institutions shall effectively enhance their sense of responsibility, regard strengthening the monitoring and early warning of suspected illegally raising fund transactions as a priority of anti-money laundering monitoring, coordinate and integrate resources, strengthen departmental cooperation, and establish a long-term mechanism to ensure effective monitoring and timely early warning, and provide strong guarantee for prevention and handling of illegal fund-raising.
II. Improving the working mechanism for monitoring and early warning of illegally raising fund transactions
1. Improving the model for monitoring and early warning of illegally raised fund transactions.
According to the new characteristics and new rules of illegal fund-raising, the PBC has developed the Guidelines for the Identification Points of the Model for Monitoring and Early Warning of Illegal Fund-Raising (see Annex), to urge financial institutions to improve their monitoring and early warning capabilities for illegally raising fund transactions. All financial institutions shall, under the guidance of this model and in consideration of their own business, improve their anti-money laundering monitoring systems in a timely manner and continuously enhance the quality of the reports on suspicious illegally raised fund transactions. The branch offices of the PBC shall strengthen the supervision over and guidance for financial institutions and actively promote the application of the model for monitoring and early warning of illegal fund-raising.
2. Intensifying the monitoring and early warning of high-risk areas.
All financial institutions shall, in consideration of the characteristics of the region, conduct focus monitoring of the fund transactions in investment and financial management, asset management, internet finance, real estate sales, farmers' professional cooperatives, private colleges, private hospitals, elderly care institutions, pawns, auctions, financial leasing, and local exchanges, and other high-risk industries, fields and entities. Main attention shall be paid to cash deposit and withdrawal, online banking, account opening through self-service machines, and other business which are easily utilized by illegal fund-raising. For fund transactions that meet the typical characteristics of illegal fund-raising, risk investigation, analysis, research and judgment shall be conducted in a timely manner. Monitoring of enterprises and individuals with illegal and criminal records of illegal fund-raising, middle-aged and elderly people and other key victims, high-risk areas, and high-risk occupational staff members, among others, shall be intensified.
3. Innovating on the means of monitoring illegally raising fund transactions.
All financial institutions shall make full use of network information technology, big data technology and other means to strengthen the monitoring and early warning of illegally raising fund transactions. The enterprise information, personnel information, regulatory information, public opinions, and illegal or criminal conduct, among others, shall be collected in an all-round manner through multiple channels, to provide support for accurate distinction of suspicious illegal fund-raising transactions. All financial institutions shall integrate the business systems, anti-money laundering monitoring systems, and credit system of the central bank and other data systems to conduct centralized analysis, research and judgment, and improve the quality of suspicious illegal fund-raising transaction reports. The training and supervision of the counter business specialists shall be further strengthened, the role of outlet and counter business specialists shall be fully maximized, and the monitoring of suspicious transactions shall be combined organically with the identification by counter personnel.
III. Appropriately handling clues of suspicious illegal fund-raising transactions
After analyzing and identifying the suspected illegally raising fund transactions, all financial institutions shall provide the relevant information to the offices of the local leading groups for the prevention and handling of illegal fund-raising at all levels in a timely manner. Once any suspicious transaction of suspected illegal fund-raising is confirmed, it shall be reported to the local public security authorities in a timely manner and the local branch offices of the PBC.
The branch offices of the PBC at all levels shall strengthen contact and communication with the member entities and financial institutions of the local leading groups for the prevention and handling of illegal fund-raising. Analysis on or investigation of the clues of suspicious transactions of suspected illegal fund-raising reported by financial institutions shall be conducted, and the clues and materials shall be reported and transferred to relevant departments in a timely manner.
IV. Strengthening client identification
The monitoring of suspicious illegal fund-raising transactions shall be strengthened, and client identification shall be strengthened accordingly. When establishing business relationship with clients, all financial institutions shall conduct client identification in strict accordance with the provisions. The due diligence investigation of clients with relatively large risk of illegal fund-raising shall be intensified, and paying return visit, on-site investigation, verification with the public security departments, industry and commerce departments, and other departments, consulting enterprises' credit information and other various methods and means shall be taken if necessary, to verify clients' business scope, funding sources and purpose, business activity areas, enterprise sizes, and actual controllers, among others, so as to rationally divide the risk levels. During the existence of such business relations, attention shall be continuously paid to changes in clients' identity information and business operation situation, analysis shall be conducted on whether clients are suspected of false or fraudulent acts, whether the actual transactions are inconsistent with their identity, occupation or business status and other situation, clients' risk levels shall be comprehensively judged and rationally adjusted, internal control measures shall be adjusted in a timely manner, and risks shall be appropriately handled.
V. Improving the internal control rules and measures
All financial institutions shall further improve the internal control rules and measures for anti-money laundering, and revise and improve the relevant operating procedures. They shall diligently organize and conduct business training, enhance employees' awareness of preventing illegal fund-raising, and improve the sensitivity and identification ability of personnel holding relevant positions for suspected transactions of suspicious illegal fund-raising. Concurrently, they shall further strengthen management of internal performance of duties, enhance the tip-off and accountability system, resolutely put an end to employees' participation or assistance in illegal fund-raising, and take measures in a timely manner and severely hold the relevant personnel accountable upon discovery. All financial institutions shall incorporate the monitoring of illegally raising fund transactions into the audit, conduct internal inspections on a regular basis, and make rectification upon discovery of problems in a timely manner.
VI. Intensifying the supervision over and management of financial institutions
The branch offices of the PBC shall, through on-site inspection, off-site supervision, and other means, give direction to and urge financial institutions to effectively monitor the suspicious funds of suspected illegal fund-raising. Financial institutions that are found not to perform the aforesaid obligations as required shall be punished seriously according to the law.
The Shanghai Head Office of the PBC, all branches and operation offices of the PBC, and all central sub-branches of the PBC in capital cities of provinces (autonomous regions) and sub-provincial cities shall forward these Guiding Opinions to the branch offices of the PBC, urban commercial banks, rural commercial banks, rural credit cooperatives, village banks and foreign-funded banks within their respective jurisdictions.
General Administration Department of the People's Bank of China
September 29, 2016
Annex:
Guidelines for the Identification Points of the Model for Monitoring and Early Warning of Illegal Fund-Raising
[Identification Points for Account Materials]
Account opening by fund raisers: in the event of fund raising in the name of individuals, there are usually centralized opening of accounts at different places, opening of accounts through self-service machines, opening of accounts with the company of special persons, centralized opening of accounts for family members or persons with close social relations, centralized or separate opening of accounts within the territory of China in the name of people from Southeast Asian countries and other foreign nationals, opening of accounts in the name of others, and other identification points; and in the event of fund raising in the name of companies, key attention shall be paid to opening of accounts by branches of certain special types of companies in many regions within a certain period of time and opening of individual accounts for employees in batches.
Account opening by fund-raising targets: The number of newly opened accounts increases suddenly. There are often people accompanying account opening, the account opener is present and proactively requests to open e-banking, mobile banking and other business, but the business is handled at the request of the accompanying person.
Account information: A group of people from a same region form an enterprise and open an account in a centralized manner. The controller, agent, and person in charge of finance concurrently hold positions at several entities and have blood relationship or kinship. The telephone numbers kept for individual accounts in different account names are identical and the addresses thereof are similar. The account opening materials of multiple entities indicate that the actual controller is a same person, or the agent and person in charge of finance are the same. The telephone number is identical and the address is similar; and the address is unknown or incorrect, and the telephone number cannot be connected.
Company name: “Investment Consulting,” “Wealth Management,” “Asset Management,” “Ecological Development,” “Technology Development,” “Biotechnology,” “Consulting Service,” “Pension Insurance,” “Exchange,” “Fund Management,” “Equity Investment,” “Financial Services,” “Financial Information,” “Network Technology,” and “E-commerce,” among others, are generally included.
Frequent change in account information: Frequent change in company name, business scope, registered capital, legal representative, shareholders, supervisors and other information.
Characteristics of fund raisers: The organizers of fund-raising are mostly legal representatives, controlling shareholders or civil servants who have certain influence in the local areas.
Characteristics of fund-raising targets: The traditional fund-raising targets are mainly elderly people, women, retirees, or high-net-worth people, and high-balance people, among others; and Internet fund-raising targets are mainly the young and middle-aged.
Industries: Corporate clients are mostly engaged in real estate project investment, property management services, enterprise management consulting services, investment management consulting services, asset management, financing guarantee, precious metal investment, property rights, equity, creditor rights, forest rights, mining rights, intellectual property rights, cultural art rights and interests, financial asset rights and interests, health pension insurance, mutual aid for agriculture, etc., regional characteristics or pillar industries are also involved.
Internet finance: Close attention shall be paid to Internet finance formats such as P2P, online small loan, crowd-funding, Internet funds, Internet insurance, Internet trust and consumer finance. An enterprise shall be verified whether it is a formal member of the National Internet Finance Association of China and whether it has other relevant qualifications.
Virtual currency: Close attention shall be paid to network platforms that engage in virtual currency, prepaid cards, and game currency trading. Attention shall be paid to whether the pyramid scheme is adopted for promotion.
[Identification Points for Capital Trading]
Fundraising: A large amount of centralized transfer or remittance to a small number of bank cards or accounts through a bank or non-banking payment institution.
Rebate: Rebate funds are fixed on the same or adjacent date of each month (or a certain period).
Single amount: Transfer or remittance is generally based on a certain amount (for example, 10,000 yuan), in a multiple relationship, or proportional to the exchange rate. A single amount sometimes does not end with a common integer, for example “.35,” “.49,” etc., as a kind of mark. For Internet fund-raising, interests are generally accrued continuously. When investors withdraw funds, interests and principal are paid concurrently, and the amount often does not meet the rule of multiple.
Total trading amount: The accumulated trading amount of an account is often very large, up to millions of yuan or even hundreds of millions of yuan. Account fund trading activities are obviously inconsistent with the depositor's age, occupation, place of residence, and company's operating conditions, among others.
Trading method: For traditional fund raising, direct transfer through counter deposit, ATM deposit, e-banking, and mobile banking are more common; for Internet fundraising, e-banking and online payment, among others, are more common.
Trading areas: The areas of traditional fund-raising are generally limited to local areas or surrounding areas; and Internet fund-raising involves a wide range of areas, even throughout the whole country.
Purposes of remittance: Purposes on the remittance order include “investment,” “investment fund,” “loan,” “repayment,” “dividends,” “interests,” “interest rebate,” “rebate” or name of a fundraising project.
Deposit and withdrawal of cash: month-on-month deposit and withdrawal of cash in a client's account have been abnormally increased; several agents deposit and withdraw cash over the counter within a short period of time; and a same agent deposits and withdraws cash as an agent of multiple accounts within a short period of time.
Trading cycle: Initial account opening or remittance scale continues to expand, and lasts for a period of time; the growth rate of mid-term remittance and transfer scale slows down, and the operation of funds continues; and the scale of remittance in later period declines, and the business is intermittent.
Division of purposes of accounts: The division of purposes of accounts is obvious. The funds in a collection account are “remitted in a distributed manner and transferred to other accounts in a collective manner,” and sometimes there will be huge amount of funds in the accounts; the funds in transfer accounts are “remitted and transferred rapidly and frequently,” and the book balance is basically zero or extremely small; and funds in a rebate account is “remitted in a collectively manner and transferred to other accounts in a dispersed manner,” and the trading time is often concentrated.
Test trading: After an e-banking is opened for a receiving account and transfer account, there is usually a small-amount trading before large-amount trading occurs.
Evading monitoring: Funds are divided into parts that are intentionally lower than the large-scale reporting standard; funds are transferred from one account to another, and then returned to the original account; and an account will be closed or not be used after being used for a period of time.
IP address: Multiple accounts are logged in at a same IP address; a same account is logged in at different IP addresses in a short period of time; an IP address is camouflaged; and an IP address is used outside the country.
[Identification Points for Acts]
Abnormal acts: After completing the business, a client requests the teller to record the remittance time on the receipt of the remittance voucher for client, and, after each transfer over the counter, always immediately asks the other party whether the funds have arrived, or rushes to send the photo of the receipt to the other party. When opening a bank account, a client generally requires to set the maximum amount of e-banking transfer, and buys a USB Key, which does not match his or her identity (such as the elderly, migrant worker, deaf and mute person, etc.).
Ignoring dissuasion: After a teller reminds him or her of the risk, the client still insists on remittance. When a teller tries to understand the specific purpose of the funds, the client shows obvious boredom or resistance.
Publicity: They conduct publicity through media, recommendation meetings, distribution of publicity materials, websites, SMS and other approaches; parade high yield, high return, low risk, and low threshold, to tempt public participation; or falsely claim cooperation with banks or acceptance of banks' fund supervision and custody.
Centralized change of passwords: Changing passwords of multiple accounts in a centralized manner through ATM machines and e-banking.
Abnormal query: Multiple queries in a same account within a short period of time.
