China heightens alert over illegal funds as internet finance booms

BEIJING, Apr 21 (Reuters): The fast development of internet finance in China is driving an increase in cases of illegal fund raising, a situation that could worsen if regulation does not catch up, a senior official at the country's banking sector watchdog said on Monday.
Liu Zhangjun, a director at the China Banking Regulatory Commssion (CBRC) in charge of combatting illegal fund-raising, said some of the recent cases have been disguised as normal online financial services, requiring tighter scrutiny.
He particularly singled out cases conducted in the name of "crowd funding" and "P2P lending", two types of internet finance that are gaining increasing popularity among China's vast number of depositors.
"As internet finance is developing rapidly, many illegal funding activities are moving from offline to online," Liu told a media briefing jointly held with the Ministry of Public Security and the Supreme Court.
"Some lawbreakers are seeking loopholes left by a regulatory vacuum and blurred legal boundaries for new forms of financing," he added.
Beijing has consistently taken a very harsh stance towards illegal fund-raising, a term usually used to describe deposit-taking from the public by people without licences to do so, because it can lead to financial market disorder and threaten social stability.