The latest compliance news: regulatory developments, punishments, guidance, permissions and new product and service offerings.

China
A senior top official at China’s banking and insurance watchdog has said that tighter scrutiny is needed to contain shadow banking risks, the South China Morning Post reported yesterday.
 
China must dismantle shadow banking risks and strengthen regulation to reduce related risks in the banking system, Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission, was quoted by the newspaper as saying at a forum over the weekend.

Liang noted that China’s shadow banking sector had shrunk by RMB29 trillion ($4.3 trillion) as of end June from an all-time peak, which he did not specify, the report said.

The shadow banking sector, which includes wealth management fund products, entrusted loans, small credit and peer-to-peer loans, was estimated at RMB84.8 trillion in 2019, equivalent to 86 per cent of gross domestic product and 29 per cent of the nation’s total banking assets. 

For some time, policymakers have worried that certain products carry large risks because of their complex structure, while inappropriate financial innovation has led to new variants of shadow banking, state media Securities Daily quoted Liang as saying in a report on Saturday, and reiterated by the SCMP report.
 
There have already been concerns about fractures in the Chinese economy, as in the case of debt-laden real estate developer Evergrande, for example.
 
In 2018, China brought in rules to suppress shadow banks and regulate off-balance-sheet financial activities by asset management firms, giving them until the end of 2021 to comply with the rules.