Fake financial products worth 3 billion signals regulatory storm in China banking industry
18th April Beijing-It is reported that on-site inspection to the Chinese banking industry has been conducted throughout the country. CBRC, China Banking Regulatory Committee, has released 7 regulatory documents since 28th March. The on-site inspection is to implement these regulatory measures to control risk within the banking system in China. The unusual move coincides with a 3 billion scam with over 150 victims in Beijing.
The case was exposed by accident. A high-net-worth client, one of the 150 private banking customers of the Beijing branch, posted a picture of the financial products that he bought from the bank, asking why he never spotted the same products in other branches of Minsheng Bank. Then the picture caught the attention of other employee in Minsheng Bank. He found that the product was not registered in the system and reported to the headquarter. The total amount of that specific product could be up to 3 billion yuan. Most of customers were lured by the annualized 8.4% “guaranteed interest”. After the case was exposed, the director of that branch has been detained by police for further investigation.
It’s learned that the bank forged the financial products in order to cover loss incurred from a fake commercial bill. The financial product is not registered in the balance sheet of that branch.
Earlier report today indicates that more employees of the bank were invited to “drink tea” by the police and the amount involved could go up to 4 billion yuan. The problem with the case is that a common customer is not in a position to verify the authenticity of financial products offered by bankers. Much of the sales are built on personal trust just like this 3 billion case. However if the banking data are registered on a blockchain, then one can easily verify the authenticity.
Blockchain is a trust machine to plug most of these loopholes in humanity.
The case happens to coincided with the on-site inspection carried out by CBRC. The on-site inspection is to push the implementation of recent regulatory documents. A regulatory storm is taking shape in the banking industry, which is definitely going to impact the Bitcoin ecosystem in China.