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Blockchain, artificial intelligence... Beware of illegal finance and confuse investors with innovative concepts

Time : 05/06/2022 Author : dp5bfg Click : + -
        Recently, Shanghai's procuratorial organs released the 2019 financial procuratorial white paper to sort out and analyze the current financial crime cases, sort out the reasons, characteristics and development trends of financial illegal and criminal activities, and put forward countermeasures and suggestions for preventing and resolving financial risks based on the procuratorial function, with a view to further strengthening the fight against financial crimes, preventing financial risks, and maintaining financial security. In 2019, Shanghai's procuratorial organs accepted 1772 financial crime review and arrest cases involving 3065 people, and approved the arrest of 2605 people. It accepted 2063 cases of review and prosecution of financial crimes involving 4228 people, involving a total of 7 categories and 31 charges, including 460 cases of financial fraud involving 738 people, 1489 cases of disrupting the financial management order involving 3108 people, 6 cases of obstructing the management order of companies and enterprises involving 19 people, 80 cases of disrupting the market order involving 320 people, and 28 cases of financial practitioners involving 43 people (see Figure 1).
        The case shows the following characteristics:. Criminal cases of illegal fund-raising continued to occur at a high rate, causing serious social harm. First, large and important cases of illegal fund-raising occurred frequently. In 2019, Shanghai's procuratorial organs accepted 1407 cases of investigation and prosecution of illegal absorption of public deposits, 2929 people, and 136 cases of investigation and prosecution of fund-raising fraud, 281 people (see Figure 2), involving a large number of investors and a huge amount of money. Second, the means of "getting customers" are becoming more diversified. In addition to traditional offline publicity, word-of-mouth, online advertising and other methods, illegal elements use technical means to illegally obtain citizens' personal information and then publicize it. For example, the Technology Department of a company involved in the case conducts competitive ranking on the search website through self-made phishing web pages containing fraudulent contents, entices customers to fill in their names and communication contact information, and after illegally obtaining personal information of citizens, it imports the telephone call system, and the salesman directly contacts the victim in the system.
        Third, the lack of effective supervision over the release of financial advertisements has become an "accomplice" to the crime of illegal fund-raising. The propaganda means of illegal fund-raising crimes permeate all fields, reflecting the characteristics of the integration of traditional media and new media. Fourth, MLM type illegal fund-raising is still active. The composite method of "MLM + illegal fund-raising" makes criminal activities spread quickly and infringe on a wide range. Illegal financial business cases have risen rapidly, and off-site individual stock option cases have piled up in the financial trade zone. In 2019, the cases of illegal financial business showed the characteristics of high concentration of business objects and high concentration of crime sites. Among them, the case of illegal operation of individual stock over-the-counter options has attracted attention. The companies involved are highly concentrated in the financial element gathering area, and they have set up an Internet option trading platform by themselves. They have also developed apps, wechat official account and small programs dedicated to the investment of individual stock over-the-counter options. Through multiple packaging, they create a "dazzling halo" to induce investors to invest, and often can gather hundreds of investors from all over the country within 2 to 3 months.
        By raising the royalty rate, the perpetrator wantonly "collects wool" from the investors or sets up withdrawal barriers to "trap" the investors to ensure the proceeds of crime. The risks of the private fund industry have further highlighted and deserve high attention. In the past two years, there have been many criminal cases involving private equity funds registered. The case has the following characteristics: it broke through the standard of qualified investors, directly or in a disguised form, publicized and promoted to the public, and the number of people exceeded the legal limit; Direct or disguised commitment to fixed income or principal guaranteed income; Lack of supervision mechanism for fund operation and management, private fund managers arbitrarily occupy and misappropriate fund assets, and even use them for crimes; Failing to disclose to the investors the possible conflicts of interest and major information that may affect the legitimate rights and interests of the investors in accordance with the contract; The fund manager makes up the project or makes false statements, causing serious losses to the investors; During the fund raising, there are such characteristics as illegal bribery and other job-related crimes.
        The concept of financial innovation frequently appears in illegal financial activities, and investors are easily confused. Under the background of financial reform and innovation, various financial innovation models and products have greatly promoted the convenience of financial transactions. However, some lawbreakers have committed crimes under the guise of financial innovation. Blockchain is the highlight of financial innovation in recent years, and its application scenario is & mdash& mdash; Virtual currency has been clearly defined by the regulatory authorities in China, and the behavior of issuing and financing virtual currency is defined as "an unauthorized illegal public financing behavior". However, in practice, illegal elements still use the banner of financial innovation to illegally raise funds or commit other financial crimes by issuing so-called virtual currency and digital currency.
        Another example is the specific application of artificial intelligence (AI) in securities activities & mdash& mdash; Intelligent investment consultants have also attracted much attention. In the case, crimes have been committed in the name of intelligent investment consultants. The role of illegal financial platforms is prominent, and the follow-up and help type financial crimes such as money laundering, concealment and concealment of criminal proceeds are more prominent. At present, the methods of financial illegal and criminal acts are constantly renovated and the criminal chain is constantly lengthened. On the one hand, the role of the illegal platform that provides technical information services for illegal financial activities is prominent, and its "specialized" services are fuelling financial crimes; On the other hand, the help type and follow-up type of financial crimes are prominent, and the most obvious is money laundering crime.
        First of all, illegal platforms have become an important node for linking, copying and spreading financial crimes. Secondly, money laundering cases are mostly related to illegal fund-raising. Since 2016, Shanghai's procuratorial organs have accepted money laundering cases every year. In 2019, they accepted 5 money laundering review and prosecution cases, of which 4 were related to illegal fund-raising crimes. It is particularly noteworthy that the phenomenon of using virtual currency and third-party illegal platforms to launder money has further increased the difficulty of investigating and tracking criminal clues. Import and cross-border financial crimes deserve attention, and transnational and cross-border financial crimes deserve vigilance. With the large cross-border flow of goods, funds and personnel, especially the gradual opening of China's financial market, the number of cross-border financial crimes has gradually increased, and the import and cross-border financial risks deserve attention.
        In 2019, a number of foreign criminal gangs committed financial crimes in China. Among them, it is also found that some foreign companies seek agents in China to carry out financial illegal and criminal activities without obtaining the administrative permission of the corresponding financial regulatory authorities in China. In addition, foreign exchange crimes and other foreign-related financial illegal criminal activities have taken on new characteristics, involving multiple charges and comprehensive methods of foreign exchange evasion, and the foreign exchange market risk and bank capital risk are superimposed. The number of crimes committed by financial practitioners was basically the same. In 2019, the city's procuratorial organs accepted 28 criminal cases involving 43 financial employees, which was basically the same as that in 2018 (31 cases and 37 people).
        The following characteristics of the case deserve attention: first, there are still cases of fraudulently obtaining funds by using the identity of its financial institution staff and customer resources. The second is to use the management loopholes of financial institutions to commit crimes and form "nest cases". In 2019, there were 15 job encroachment cases in a life insurance company, all of which were caused by the company's internal personnel, aiming at the company's management loopholes, using other people's ID cards, bank cards and other false additions, then creating insurance policies and affixing them to the name of the salesman who added the false additions, to encroach on the training allowance and reward expenses of the life insurance company. Third, cases of financial practitioners, especially former insurance and banking practitioners, using their original customer resources to carry out illegal fund-raising, and cases of private placement institutions involved in record management engaging in illegal fund-raising have occurred from time to time.
        Fourth, cases of job-related crimes committed by employees of foreign-funded financial institutions. Financial crimes involve a wide range of areas and do great harm to society. We must do a good job in preventing financial risks. In the face of the innovative development of the financial market, it is necessary to further strengthen the bottom line thinking and risk awareness, pay more attention to preventing risks on the basis of stable growth and promoting high-quality development, resolutely fight the tough battle of preventing and resolving major financial risks, and resolutely safeguard financial stability and security. The financial regulatory capacity needs to be improved, and the "regulatory gap" needs to be filled. First, there are hidden dangers in the field of financial innovation due to the concentration of risks. It is still necessary to improve the concepts and methods of financial supervision. Second, the means of finding clues of illegal and criminal risks in the field of filing system need to be improved.
        Third, there are still gaps and blind spots in financial supervision, and it is necessary to strengthen the whole process supervision of relevant markets and institutions. Some financial institutions or quasi financial institutions lack risk awareness and legal awareness. For example, some banks have obvious omissions in the loan review and post loan inspection, giving criminals an opportunity to take advantage of. In the field of private equity funds, some private equity fund managers have a chaotic internal structure, lack of internal control measures, senior executives do not meet the requirements of fund laws and regulations for employees, and lack the ability to safely and effectively manage private equity funds. The "gatekeeper" function of some intermediary organizations is seriously lacking. The stable development of the capital market can not be separated from a high-quality and high-level securities service intermediary team.
        However, in practice, there are many illegal and illegal cases of listed companies, and some intermediary organizations are lazy to perform their duties and even actively participate in crimes. In the case of fraudulent issuance of private placement bonds handled in 2018, it was exposed that the Underwriters, certified public accountants and other intermediaries failed to fulfill their obligations of diligence, and even committed crimes together with illegal elements. In addition, in the case of insurance fraud, the problem of intermediary agencies and professionals participating in the crime has also been exposed. With the rapid development and changes of financial crimes, the judicial organs are facing more challenges. First, the transnational and cross-border characteristics of financial crimes highlight the controversial issue of the application of law. The handling of transnational and cross-border financial crime cases has brought many new challenges to the investigation and judicial organs, including differences in legal systems, imperfect investigation cooperation, and insufficient judicial assistance.
        There are differences in the form of evidence, the subject of evidence collection, the stage of evidence collection, and the requirements of cross examination in various jurisdictions. There are many difficulties in investigation cooperation and judicial assistance. The cross-border evidence collection efficiency is not high, the case transfer channel is not smooth, and it is difficult to pursue fugitives and stolen goods abroad. Second, new types of cases occur frequently, especially for some financial derivatives with complex design, the regulatory measures and legal positioning are not clear, and the nature is controversial. The judicial authorities are facing greater difficulties in reviewing. We will actively improve the construction of the financial legal system to provide a legal system guarantee for the stable development of the financial market. The perfection and maturity of the legal system will directly affect a country's governance ability and level. A good legal system design and arrangement is the premise and foundation for effectively resolving financial risks.
        Under the background of the implementation of the securities law, it is suggested to promote the revision and improvement of the corresponding rules and regulations of the securities regulatory department, the exchange trading rules and the self-discipline organization management measures, and to modify the relevant provisions of the criminal law in accordance with the securities law, so as to tighten the criminal law net, increase the intensity of criminal punishment and increase the cost of illegal crimes. We will further improve financial regulation and keep the bottom line of financial security. It is suggested to strengthen an integrated and coordinated financial regulatory system, form a regulatory synergy of financial regulatory departments' overall supervision, associations' self-regulation and financial institutions' self-regulation, and fill the regulatory gap. Build a penetrating and dynamic regulatory mechanism. We will carry out accountability for Financial Violations and crimes.
        We will strengthen the link between administrative law enforcement and criminal justice, increase the intensity of punishment for illegal crimes, improve efficiency, and improve the link between administrative punishment and criminal justice. We will strengthen the guidance and supervision of financial innovation and properly handle the relationship between innovation and risk. Explore different types of scientific and technological financial institutions, and formulate differentiated rules for access management, capital pool management and business scope supervision of scientific and technological financial institutions. Learn from and explore the "regulatory sandbox" system to allow financial institutions to engage in scientific and technological financial innovation experiments within the approved scope after the application is approved. Integrate the data resources of the regulatory authorities, establish an early warning and emergency response mechanism for financial risks, and avoid the spread of financial risks.
        We will strengthen the role of self-discipline organizations, and explore and build a balanced regulatory model that "focuses on government regulation, supplemented by industry self-discipline.". It is suggested to further improve the legal basis of self-discipline organizations and provide special legal guarantee for the development of self-discipline organizations. Define the jurisdiction of each organization within the self-discipline system, strengthen the division of responsibilities, handle the relationship between different self-discipline organizations, highlight the professionalism of self-discipline organizations, and effectively implement the self-discipline functions. We will strengthen the "gatekeeper" function of intermediary institutions in the capital market, and investigate the legal responsibilities of those who fail to perform their duties according to law. It is suggested to further regulate the practice behavior of securities intermediary institutions and strengthen their internal control and compliance construction; Promote the professional ethics education and warning publicity of illegal and criminal acts for the staff of intermediary institutions, and urge them to perform their duties prudently, strictly observe their professional ethics and the legal bottom line; Strengthen the external supervision of intermediary institutions, and promote them to practice in good faith; We will standardize the responsibility bearing system of securities intermediary institutions, comprehensively apply civil, administrative and criminal penalties, and raise the cost of illegal and criminal activities of intermediary institutions.
        Optimize the investor protection mechanism and safeguard the legitimate rights and interests of investors. We will strengthen publicity on the rule of law and guide financial consumers to make rational investments. It is suggested that financial institutions fulfill their obligations of audit, risk disclosure and information disclosure due diligence to avoid blind investment by the public without corresponding risk tolerance. It is suggested that relevant institutions implement the reward system for reporting, promote the public's complaints, supervision and reporting, and strengthen the investigation and punishment of financial illegal acts. The procuratorial organs can explore the public interest litigation system in the securities and futures market, promote the application of the leniency system of confession and punishment, and effectively safeguard the legitimate rights and interests of investors.
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