China: Regulator promises severe penalties for those who violate financial sector regulations
Source: Asia Insurance Review | Jun 2018
The China Banking and Insurance Regulatory Commission (CBIRC) has warned that it would take a ‘high pressure’ stance to impose strict penalties and press for strict accountability in cases of violations of laws and regulations.
The declaration was made in a statement posed on the CBIRC’s website issued in relation to a work conference held on 14 May that discussed steps to tighten regulatory action against chaos in the banking and insurance markets.
This resolve to impose tough penalties on violators is reflected in the high profile case of Mr Wu Xiaohui, the disgraced former chairman of the Anbang Insurance Group. Mr Wu was sentenced on 10 May to 18 years in prison on charges of fraud and embezzlement. The court also ordered the confiscation of Mr Wu’s personal property worth $1.6bn and deprived him of his political rights for four years.
Mr Wu, Anbang founder, had led Anbang’s life insurance company to be among the top three insurers in the country within a few years. The group attracted international attention with its $1.95bn purchase in 2014 of the iconic Waldorf Astoria hotel in New York.
Regulators took control of the Anbang group in February and are bailing it out with a CNY61bn ($10bn) loan from the Insurance Protection Fund.
This treatment of Mr Wu by the authorities reflects their concern that insurance and other financial institutions might jeopardise the stability of the financial system through aggressive risk taking.
The authorities said that Mr Wu used false information in 2011 to get regulatory approval to sell insurance products. They also said that he had oversold insurance products by CNY724bn and had diverted CNY65bn to another company he controlled, which he had partly used for ‘lavish personal spending’.
The Anbang group had relied on selling high-yield wealth management products to more than 10m retail customers for its funds. The authorities had been worried that any failure to pay out on the products might lead to social unrest. A