Fintech Partners of Beijing Banks Come under Tighter Scrutiny

Beijing’s municipal financial authority has launched new regulations that put greater pressure on fintech companies that cooperate with regional banks.

On 12 October the Beijing banking and insurance regulator released the “Notice Concerning Standardisation of Cooperative Relationship Operations between Banks and Fintech Companies and Internet Insurance Operations” (关于规范银行与金融科技公司合作类业务及互联网保险业务的通知).

The Notice steps up regulation of cooperation between commercial banks and fintech companies with the introduction of five “strict prohibitions.”

The five “strict prohibitions” include:

1. Strict prohibition on engaging in cooperation without approval from headquarter banks;
2. Strict prohibition on engaging in cooperation with enterprises that engage in illegal financial activities in the name of fintech;
3. Strict prohibition on engaging in cooperation with enterprises that have undertake false transactions;
4. Strict prohibition on engaging in cooperation with enterprises that have employed illegal loan collection methods;
5. Strict prohibition on engaging in cooperation with enterprises that have stolen, misused, illegally traded or revealed customer information in the name of “big data.”

The Notice further requires that banks within the Beijing area strengthen their regulation of cooperative organisations, and establish approval, assessment and withdrawal mechanisms for cooperative relationships.

The Notice further prohibits banks within the Beijing area from:

• Exceeding their own business scope when undertaking cooperative relationships;
• Using external cooperation to dodge regulatory requirements.