A senior official from the People’s Bank of China (PBOC) has shed light on the nature of the “regulatory discussions” held with Ant Group on 26 December, just following the launch of an anti-trust probe into its e-commerce affiliate Alibaba.
Pan Gongsheng (潘功胜), PBOC deputy governor and director of the State Administration of Foreign Exchange (SAFE), said that problems highlighted by regulators during discussions with Ant Group executives included “insufficient corporate governance mechanisms, weak legal awareness, a disdainful regard for regulatory compliance requirements, the existence of regulatory arbitrage conduct in breach of regulations and use of a position of market advantage to exclude operators in the same sector.”
Pan made the remarks on 27 December at an official press conference.
According to Pan Chinese regulators made “rectification demands” of Ant Group in five key areas including:
- Returning to its payment origins, increasing the transparency of transactions and strictly prohibiting irregular competition.
- Lawful license-holding and lawful and compliant operation for its personal credit business, and the protection of personal data privacy.
- The lawful establishment of a financial holding company, strict implementation of regulatory demands, and ensuring that capital is sufficient and affiliate transactions are compliant.
- Improvements to corporate governance, and strict rectification in accordance with prudential regulatory requirements of financial activities that are not in compliance with regulations including loans, insurance and wealth management.
- Lawful and compliant undertaking of securities fund operations, strengthening of securities organisation governance, and compliant undertaking of asset securitisation operations.
“Ant Group must fully understand the severity and necessity of rectification and formulate a rectification plan and implementation timetable as soon as possible,” said Pan.
“Financial regulatory departments will maintain close communication with Ant Group and listen fully to its opinions and recommendations.
“As an enterprise that possesses major influence within the fintech and platform economy spheres, Ant Group must consciously abide by state laws and regulations, and must incorporate enterprise development into the broader context of national development, and pragmatically bear corporate social responsibilities.”
Pan also said that in future Chinese policy trends will abide by the following principles:
- Firmly break down monopolies, rectify and investigate inappropriate competition conduct, and maintain a fair and competitive market order.
- All financial activity must be included within regulation and financial activities must be licensed, while there will be “zero tolerance” for all forms of illegal or non-compliant conduct.
- Lawful protection of property rights, promotion of the entrepreneurial spirit, spurring the vitality of market actors and the creativity of society, and strengthening the core competitiveness of China’s fintech companies globally.