Terror funding and money laundering targeted as China takes tough approach to internet finance

Chinese authorities plan to set up a technical support system to tackle money laundering and financing for terrorism amid the rise of internet finance, a top central bank official said yesterday, emphasising that both conventional and online financial activities should be subjected to the same regulatory standard.

China’s internet finance companies often lacked awareness in risk control, compliance and consumer rights protection, Pan Gongsheng, vice-governor of the People’s Bank of China, said at the official launch of the National Internet Finance Association of China.

The Shanghai-based industry group would join Chinese regulators in monitoring suspicious trade activity and identifying their clients, Pan said.

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The establishment of the association, which was instructed by the central bank and other financial regulators, follows China’s clampdown on Ezubao, a peer-to-peer lending company which had duped about 900,000 investors out of 50 billion yuan.

Pan said regulations on internet financing would be issued soon covering such areas as online lending and equity crowdfunding.

He said regulatory standards would apply equally to traditional and online financial businesses.

“As long as it is doing the same financial business, [we would] apply the same policies, regulations and standards,” Pan said. “We will determine the actual nature of individual internet financing products by examining their source of funds, intermediaries, and ultimate use of funds.”

The newly established industry group would seek to self-regulate the industry, Pan said.