In recent years, the problem of illegal fund-raising has become increasingly prominent, and the number of cases has risen at a high level. Major cases involving tens of billions of dollars, such as e-Rental, Pan Asia and China-Shanxi Department, have aroused great concern in society. Internet finance, especially P2P institutions in peer-to-peer lending, grew wildly, and the illegal business problems were prominent, which accumulated a lot of risks. The occurrence of these risk events is the reality of illegal fund-raising in the name of "financial innovation" and "internet finance".

On April 27th, 14 ministries and commissions jointly organized by the State Council to deal with illegal fund-raising announced in Beijing that they would strike hard at illegal fund-raising and resolutely hold the bottom line of no systematic and regional risks.

To this end, we have comprehensively interpreted the specific measures taken by the regulatory authorities such as the Party, the Three Meetings and so on in this rectification storm, and presented them in many ways, and will continue to investigate and track the rectification situation afterwards.

On the one hand, traditional illegal fund-raising develops from offline to online, and illegal fund-raising is carried out under the guise of "financial innovation" on the Internet; On the other hand, the risks of illegal fund-raising in Internet finance-related formats are also fully revealed, among which the risks of illegal fund-raising in P2P field are the most prominent.

On April 27th, 14 ministries and commissions of the Inter-Ministerial Joint Meeting on Handling Illegal Fund Raising in the State Council announced in Beijing that they would crack down on illegal fund raising, resolutely curb the spread of illegal fund raising, and resolutely hold the bottom line of no systematic and regional risks.

according to the statistics of the inter-ministerial joint conference office, the number of new cases of illegal fund-raising in China, the amount involved and the number of people involved in fund-raising increased by 71%, 57% and 12% respectively year-on-year, reaching the highest peak in the past years, and the cases of inter-provincial fund-raising with thousands of people and fund-raising amount exceeding 1 million yuan increased by 73%, 78% and 44% respectively year-on-year.

In view of the grim situation of illegal fund-raising, the third meeting of the Party and 14 ministries and commissions including the Supreme People's Court, the Supreme People's Procuratorate, Ministry of Education, Ministry of Industry and Information Technology, Ministry of Public Security and Ministry of Commerce jointly stated that they will organize a nationwide special rectification campaign for illegal fund-raising risks in the second half of this year, and conduct a comprehensive investigation on key areas such as private investment and wealth management, P2P peer-to-peer lending, farmers' cooperatives, real estate and private equity funds, as well as private education, local exchanges and mutual insurance, so as to find out the risk base and classify and dispose of them according to law.

Advertising management is a means to curb illegal fund-raising from the source. The inter-ministerial joint meeting will organize a national publicity month to prevent illegal fund-raising in May this year. In May-July, we launched a nationwide investigation and cleaning-up campaign on illegal fund-raising advertisements, strengthened the examination and supervision of advertisements suspected of illegal fund-raising, and studied and strengthened the control of financing advertisements published by emerging media such as portals, Weibo, WeChat, mobile phone clients and Baidu search.

detection and early warning to realize "beating early and beating small"

whether it is all kinds of "running away" events in newspapers, redemption crisis of financial institutions or official authoritative statistics, the situation of illegal fund-raising is not optimistic.

Jiang Yongyi, vice president of the Third Criminal Court of the Supreme People's Court, said that criminal cases of illegal fund-raising mainly involved two crimes: the crime of illegally absorbing public deposits and the crime of fund-raising fraud.

according to the data of the supreme court, the number of criminal cases of illegal fund-raising in courts across the country has increased significantly, and 2,122 cases and 4,825 cases of illegally absorbing public deposits, 684 cases and 1,18 cases of fund-raising fraud were newly received respectively. On the basis of the high number of cases received, the number of cases received increased by 127% and 48.83% respectively.

Zhang Xiaojin, deputy director of the Investigation and Supervision Department of the Supreme People's Procuratorate, also said that the national procuratorial organs approved the arrest of 6,928 cases and 1,771 people suspected of illegally absorbing public deposits, and the number of cases and people increased by 112.4% year-on-year; 872 cases and 1,21 people suspected of fund-raising fraud were arrested, up by 54.9% and 52.4% respectively.

In view of this, the State Council has held several special meetings to study the prevention and disposal of illegal fund-raising. In October, the Opinions of the State Council on Further Improving the Prevention and Disposal of Illegal Fund Raising (Guo Fa [215] No.59) (hereinafter referred to as "Document No.59") was issued.

After the publication of Circular No.59, 26 key tasks including industry supervision, monitoring and early warning, publicity and education, case handling, etc. were defined, which is a programmatic document for various departments to deal with illegal fund-raising.

Circular No.59 further clarifies the responsibilities of various departments, that is, the provincial government is still the first responsibility to deal with illegal fund-raising, and the supervisors and regulatory departments of various industries undertake the regulatory responsibility of preventing and controlling illegal fund-raising in their own fields, and the inter-ministerial joint meeting strengthens organization and coordination.

Circular No.59 also emphasizes that all regulatory authorities should follow the principle of linking supervision with market access and industry management to ensure that there is no vacuum in the supervision and prevention of illegal fund-raising in all industries.

for industries that need market access permission, such as banking, securities, insurance, pawn, financing guarantee, real estate, etc., the access supervision department is responsible for "whoever takes the child away".

the competent authorities shall take the lead in the industry fields that do not need market access permission but are guided, standardized and promoted by clear competent authorities; The local people's governments at all levels shall organize and coordinate the relevant departments to take charge of industries without supervisors and regulatory departments, such as investment consulting, investment management and non-financing guarantee.

14 ministries and commissions indicated that they would establish an all-round monitoring and early warning system to realize "striking early and striking small". According to Yang Yuzhu, director of the Africa Affairs Office, after the document was issued, the Ministry of Public Security, the State Administration for Industry and Commerce and other departments successively started monitoring and early warning work, strengthened the construction of information systems, and improved monitoring and analysis methods; The People's Bank of China and the China Securities Regulatory Commission have successively deployed risk investigation and rectification actions in key industries to prevent and resolve potential risks.

Liu Yunfeng, deputy director of the Bureau for Combating Illegal Securities and Futures Activities of the China Securities Regulatory Commission, said that the private equity industry and securities and futures institutions should conduct risk investigation on their participation in P2P business, comprehensively clean up and standardize off-exchange fund-raising activities, and organize special inspections on Internet equity financing platforms.

Wang Zhu, deputy director of the Inspection Bureau of the China Insurance Regulatory Commission (CIRC), said that the CIRC will organize 12 key regions and 13 key institutions to carry out special risk investigation against illegal fund-raising in view of the situation that illegal fund-raising of Internet finance business in the investment and financing field is infiltrated and transmitted to the insurance industry, and the participation cases are frequent, focusing on the risk of "elite" marketers and grassroots executives participating in illegal fund-raising.

confusing investors in the name of "financial innovation"

Yang Yuzhu also said that illegal fund-raising activities showed an obvious trend of networking. On the one hand, traditional illegal fund-raising develops from offline to online, and illegal fund-raising is carried out under the guise of Internet "financial innovation"; On the other hand, the risks of illegal fund-raising in Internet finance-related formats are also fully revealed, especially in peer-to-peer lending (P2P).

there are two main forms of illegal fund-raising in P2P field: first, some P2P platforms design the loan demand as a wealth management product and sell it to lenders, or collect the funds first and then find the borrower, so that the lender's funds enter the intermediate account of the platform and are actually controlled and dominated by the platform.

Second, the P2P platform issued false high-interest loan targets, even issued false targets to finance themselves, and adopted the Ponzi scheme of borrowing new loans to repay old loans, raising a large amount of funds to meet their own capital needs in a short period of time, and some operators even absconded with the money.

Yang Yuzhu said: "With the help of the Internet, publicity, sales, fund payment and collection are carried out, and the online and offline integration is realized, which makes illegal fund-raising spread faster, covers a wider range, sells products more conveniently, and transfers funds more quickly, which greatly breaks through geographical boundaries, accelerates the spread of risks and increases the difficulty of cracking down on cases."

For example, in traditional illegal fund-raising cases, there are many cases in the county, while Internet finance completely breaks through geographical restrictions and spreads to surrounding areas and even the whole country by relying on the network. Take the risk events such as "Pan Asia" and "e-rental" as examples, involving hundreds of thousands of people and dozens of provinces, autonomous regions and municipalities directly under the central government, and raising tens of billions of yuan.

in the name of "financial innovation", the means of illegal operation or even illegal financial activities of the institutions are more subtle and confusing. Since then, the relevant regulatory authorities have warned of risks, saying that mutual financial management represented by "MMM financial mutual aid community" attracts a large number of investors to participate with high returns, and similar virtual financial management such as Baichuan Financial Coin, Crash Coin and "Motifu" have appeared one after another.

in the first quarter of this year, the public security department filed more than 2,3 cases of illegal fund-raising. Zhang Jingli, deputy director of the Economic Investigation Bureau of the Ministry of Public Security, said at the meeting that Internet finance has become a high-risk area for illegal fund-raising. On the one hand, cases in traditional fields such as breeding, real estate, commodity circulation, production and operation are still frequent; On the other hand, new cases under the banner of internet finance, farmers' professional cooperatives, investment intermediaries, equity investment, tourism, pension, private colleges and overseas listing have increased.

In view of this, the Office said that it is necessary to strengthen the monitoring and early warning of illegal fund-raising by using Internet, big data, cloud computing and other technical means.

we should also give full play to the "outpost" role of financial institutions' fund monitoring. Most of the illegal fund-raising needs to be transferred through financial institutions. The Inter-Ministerial Joint Conference requires that all kinds of technical means should be fully utilized, and on the basis of strictly implementing the reporting system of large suspicious funds, the fund changes in various account transactions, such as decentralized transfer to centralized transfer and regular batch transfer of small amounts, should be monitored and analyzed, so as to find and report the trend of illegal fund-raising funds as soon as possible.

Study on the system of pre-examination of financial advertisements

At present, there are many kinds of financing advertisements such as investment and wealth management, and some lawless elements publish advertisements suspected of illegal fund-raising through newspapers, magazines, radio, television, internet and other media, which has contributed to illegal fund-raising.

14 ministries said that it is necessary to strengthen the management of advertising information, firmly control the transmission of illegal fund-raising information, and eliminate illegal fund-raising in the bud. In the next step, the inter-ministerial joint meeting on handling illegal fund-raising will strengthen the management of advertisements suspected of illegal fund-raising.

The requirements for financing advertisements shall be strictly regulated in accordance with the principle that substance is more important than form, and no false or improper statements shall be made on products and businesses, no guarantee promises shall be made on future earnings, and no contents such as capital preservation and risk-free shall be expressed or implied.

while strengthening the supervision of mainstream media advertisements, coordinate relevant departments to strengthen the examination and management of financing advertisements published by emerging media such as portals, Weibo, WeChat and mobile phone clients.

the inter-ministerial joint meeting focused on the investigation and rectification of advertisements suspected of illegal fund-raising by emerging media, and strengthened the supervision and management of social media and communication tools such as telephone, SMS and email.

on April 13th, the State Administration for Industry and Commerce and other 17 departments issued the "Implementation Plan on Developing Internet Financial Advertisements and Special Remediation of Financial Activities Risks in the Name of Investment and Financial Management" to deploy and carry out the special rectification of Internet financial advertisements. In December, SAIC cooperated with Publicity Department of the Communist Party of China in drafting the Notice on Strengthening the Examination and Control of Advertisements Suspected of Illegal Fund-raising, in an effort to curb the spread of advertisements by illegal fund-raising.

according to the SAIC, from the current regulatory practice, it is difficult to control illegal fund-raising, and the information of various departments is not fully shared. On the other hand, the information of relevant investment companies is not disclosed to the public timely, accurately and completely, resulting in information asymmetry and lack of social supervision.

The main features are as follows: First, the pre-approval system for P2P and financial management by the financial industry authorities has not been established, and the market access list and publishing standards for advertising need to be clarified; Second, illegal fund-raising activities are concealed, and the main contents of many financial investment advertisements are corporate image promotion and brand promotion, which increases the difficulty of advertising supervision and law enforcement; Third, the suspected illegal fund-raising advertisements in the Internet field spread quickly, with a wide range and low illegal cost, and the regulatory policies and governance measures need to be further strengthened.

SAIC said that according to the requirements of the special rectification of financial advertisements on the Internet, it is suggested that the competent departments of the financial industry should work with SAIC and other relevant departments to study issues such as formulating the market access list of financial advertisements, the negative list of prohibited advertisements, and establishing a pre-review system for financial advertisements according to law, and promptly introduce relevant measures.