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The Beijing government announced on April 30 that it is getting tough with fraudulent fundraising mainly in the investment business over the next four months, to August.
This is because of an increasing number of cases discovered in the capital in recent years, resulting in immensely large property losses, especially the cases of private equity funds, online peer-to-peer loans, and other investment.
Huo Xuewen, who is in charge of the crackdown, said, "Beijing's handled 187 fraud cases by the end of this past February, involving 35.18 billion yuan ($5.67 billion) and around 275,000 people. These cause serious losses to investors and generally only around 10 percent of the total amount can be recovered and returned to the investors."
Huo explained that authorities find it is difficult to discover, identify, and collect these assets because the people involved in the scams can hide the funds and destroy evidence to escape punishment.
To discover such fraud activities, he went on to say that they are using a warning system with the help of the Internet and big data to monitor online financial product sales. The online illegal fundraising activities will be put in six categories with each having more than 200 words to describe it. The system monitors websites and analyzes their risk. Those that look likely to be raising funds illegally will be reported to the public security office.
The government says it will also do a comprehensive check across the city, with the focus on organizations selling financial products, while at the same time revising standards to measure the activities.
This move will cover private equity investment, investment consultation, third-part financial planning, e-commerce, online loans, guarantees, small loans, insurance agency, third-party payments, the factor market, and forward exchange transactions.
Another focus will be employees of financial institutions since they have been found to play an important role in the major illegal activities and anyone involved in them will face serious punishment, or, in Huo's words, "We're warning anyone who is conducting this illegal activities in Beijing that we will seriously take actions against this behavior."
