(Issued by the Order No. 247 of the State Council of the People's Republic of China on July 13, 1998, and revised in accordance with the Decision of the State Council on Abolishing and Amending Some Administrative Regulations by the Order No. 588 of the State Council on January 8, 2011)
Chapter I General Provisions
Article 1 These Measures are developed for purposes of banning illegal financial institutions and illegal financial activities, maintaining the financial order, and protecting public interests.
Article 2 All illegal financial institutions and illegal financial activities must be banned.
Article 3 For the purpose of these Measures, the term “illegal financial institutions” means institutions, formed without the approval of the People's Bank of China (“PBC”), engaging or mainly engaging in financial activities such as taking deposits, granting loans, settling funds, discounting bills, lending funds, making trust investment, engaging in financial lease, providing financing guarantee, or trading foreign exchange.
Organizations preparing the formation of illegal financial institutions shall be regarded as illegal financial institutions.
Article 4 For the purpose of these Measures, the term “illegal financial activities” means the following activities conducted without the approval of the PBC:
(1) Illegally taking public deposits or taking public deposits in any disguised form.
(2) Without obtaining approval in accordance with the law, illegally raising funds from unspecific investors in any name.
(3) Illegally granting loans, settling funds, discounting bills, lending funds, making trust investment, engaging in financial lease, providing financing guarantee, or trading foreign exchange.
(4) Other illegal financial activities as specified by the PBC.
The term “illegally taking public deposits” as mentioned in the preceding paragraph means activities of, without the approval of the PBC, taking funds from unspecific investors, issuing vouchers, and promising to repay the principal and interest within an agreed time limit; and the term “taking public deposits in any disguised form” means activities of, without the approval of the PBC, taking funds from unspecific investors not in the name of taking public deposits but promising to fulfill obligations with the same nature as those to be fulfilled in taking public deposits.
Article 5 Without the approval of the PBC, no entity or individual may form financial institutions or engage in financial activities.
Administrative departments for industry and commerce shall not grant registration to illegal financial institutions and illegal financial activities.
For illegal financial institutions and illegal financial activities, financial institutions shall not open accounts, provide settlement services, and grant loans.
Article 6 Illegal financial institutions and illegal financial activities shall be banned by the PBC.
The people's governments at places where illegal financial institutions are formed or illegal financial activities occur shall be responsible for organizing, coordinating, and overseeing the banning thereof.
Article 7 No entity or individual may intervene, refuse or obstruct when the PBC bans illegal financial institutions and illegal financial activities in accordance with the law.
Article 8 The staff members of the PBC shall keep secrets in accordance with the law when performing duties of banning illegal financial institutions and illegal financial activities.
Chapter II Banning Procedure
Article 9 Once it discovers any illegal financial institution or any activity of illegally taking public deposits, taking public deposits in any disguised form or illegally raising funds, the PBC shall immediately investigate and verify; upon its preliminary verification, the PBC shall timely request the public security authority to open a case for investigation in accordance with the law.
Article 10 In the course of investigating illegal financial institutions and illegal financial activities, the PBC and the public security authority shall cooperate with each other.
Article 11 For the criminal suspects of illegal financial institutions and illegal financial activities, and the funds and properties involved, the public security authority shall take compulsory measures to prevent criminal suspects from escaping and displacing funds and properties.
Article 12 For an illegal financial institution or illegal financial activity, once it is verified upon investigation, the PBC shall make a decision to ban it, announce it as illegal, order it to stop all business activities, and issue an announcement thereon.
Article 13 Where it discovers that a financial institution opens accounts, provides settlement services or grants loans to illegal financial institutions and for illegal financial activities, the PBC shall order the financial institution to immediately stop relevant business activities.
Where an illegal financial institution or illegal financial activity is registered with the administrative department for industry and commerce by fraudulent means, once it is discovered, the administrative department for industry and commerce shall immediately cancel or modify its registration.
Article 14 When the PBC investigates an illegal financial institution or illegal financial activity, the entity or individual under investigation must accept the investigation lawfully conducted by the PBC, truthfully report relevant information, and provide relevant materials, and shall not refuse or conceal.
Article 15 When investigating an illegal financial institution or illegal financial activity, for information and materials about the case, the PBC may take evidence by means of taking notes, reproduction, or keeping audio recordings.
If the evidence is likely to be lost or difficult to take later, the PBC may register and preserve it in advance according to the law, and any party or relevant person shall not destroy or displace the evidence.
Chapter III Review and Settlement of Claims and Debts
Article 16 For claims and debts occurring for illegal financial activities, institutions engaging in such illegal financial activities shall be responsible for the review and settlement thereof.
Article 17 Once an illegal financial institution is banned by the PBC upon announcement, if there is an entity approving its formation, an entity in charge of it, or an entity organizing its formation, such entity shall be responsible for organizing the review and settlement of its claims and debts; if there is no such an entity, the local people's government at the place where it is located shall be responsible for organizing the review and settlement of its claims and debts.
Article 18 Losses suffered from participating in illegal financial activities shall be borne by the participants themselves.
Article 19 Debts and risks incurred for illegal financial activities shall not be transferred to state-owned banks, other financial institutions, and other entities not participating in such illegal financial activities.
Article 20 The illegal properties left over after the review and settlement of claims and debts, if any, shall be confiscated and turned in to the Central Treasury at their locations.
Article 21 Any dispute arising from the review and settlement of claims and debts shall be settled by the parties concerned upon negotiations, or, if such negotiations fail, be settled by the judicial procedure.
Chapter IV Penalty Provisions
Article 22 Where a crime is constituted in the formation of an illegal financial institution or the engagement in an illegal financial activity, the liable party shall be subject to criminal liability in accordance with the law; if no crime is constituted, the PBC shall confiscate the illegal gains and impose a fine of not less than the amount of illegal gains but not more than five times the amount of illegal gains; if there are no illegal gains, the PBC shall impose a fine of not less than 100,000 yuan but not more than 500,000 yuan.
Article 23 Where approval is granted to the formation of an illegal financial institution or the engagement in an illegal financial activity, administrative sanctions shall be taken against the directly responsible person in charge and other directly liable persons in accordance with the law; if any crime is constituted, the liable party shall be subject to criminal liability in accordance with the law.
Article 24 Where a financial institution, in violation of provisions, opens accounts, provides settlement services or grants loans to illegal financial institutions or for illegal financial activities, the PBC shall order it to make correction, confiscate its illegal gains, and impose a fine of not less than the amount of illegal gains but not more than five times the amount of illegal gains; if there are no illegal gains, the PBC shall impose a fine of not less than 100,000 yuan but not more than 500,000 yuan; disciplinary actions shall be taken against the directly responsible person in charge and other directly liable persons; if a crime is constituted, the liable party shall be subject to criminal liability in accordance with the law.
Article 25 Anyone who commits a crime in refusing or obstructing the lawful performance of duties by the PBC shall be subject to criminal liability in accordance with the law; if no crime is constituted, the public security authority shall impose public security administration punishment in accordance with the law.
Article 26 A staff member of the PBC who divulges any secret in performing duties to ban illegal financial institutions and illegal financial activities shall be subject to administrative sanction in accordance with the law, or, if any crime is constituted, be subject to criminal liability in accordance with the law.
Article 27 A staff member of the PBC, the public security authority or the administrative department for industry and commerce who commits a crime by neglecting duties, abusing powers, or practicing favoritism shall be subject to criminal liability in accordance with the law, or, if no crime is constituted, be subject to administrative sanction in accordance with the law.
Where a staff member of the PBC who commits a crime by failing to transfer a case about an illegal financial institution or an illegal financial activity to the public security authority as required shall be subject to criminal liability in accordance with the law, or, if no crime is constituted, be subject to administrative sanction in accordance with the law.
Chapter V Supplementary Provisions
Article 28 These Measures shall apply, mutatis mutandis, to the banning of illegal securities institutions and illegal securities activities. The China Securities Regulatory Commission shall be responsible for implementing the banning of illegal securities institutions and illegal securities activities, and may develop specific implementation measures pursuant to these Measures.
These Measures shall apply, mutatis mutandis, to the banning of illegal commercial insurance institutions and illegal commercial insurance activities. The commercial insurance regulatory department under the State Council shall be responsible for implementing the banning of illegal commercial insurance institutions and illegal commercial insurance activities, and may develop specific implementation measures pursuant to these Measures.
Article 29 The various types of foundations, mutual aid groups, provident societies, capital service departments, capital stock service departments, settlement centers, investment companies, and other institutions formed before the entry into force of these Measures shall, if they engage in illegal financial activities beyond state policies, rectify within a prescribed time limit in accordance with the provisions of the State Council. Those continuing engaging in illegal financial activities beyond the prescribed time limit shall be banned under these Measures; if the circumstances are serious and any crime is constituted, the liable party shall be subject to criminal liability in accordance with the law.
Article 30 These Measures come into force on the date of issuance.
