Financial crime remains serious, legal experts say; apparent drop misleading

Judicial professionals said that while it may appear that financial crimes in China have declined, it's partly because the legal definition of what constitutes such crimes has changed, and the problem actually remains serious.

Efforts must be intensified to prevent financial risks and fight financial crimes, they say.

A report released on Wednesday by the Justice Big Data Institute said that about 8,400 cases of financial crimes were filed in Chinese courts in 2018, down from nearly 14,000 in 2016. Most of the crimes include fraud via fundraising, credit cards, loans and insurance.

But the numbers may be misleading.

"Although the number of such crimes dropped in the last three years, the problem of financial offenses is still serious," said Jiang Nan, a criminal judge in the Beijing Haidian District People's Court. She said the decline is mainly due to a revised judicial interpretation on credit card fraud.

"Previously, cheating a person out of 10,000 yuan ($1,490) via credit card was defined as a crime, but last year the threshold was raised to 500,000 yuan," she said. "It means some people who swindled small sums of money through credit cards are not being identified as criminals."

Liu Junhai, a commercial law professor at Renmin University of China, agreed with the judge. He said the judicial change, which aims to catch up with diversified financial developments, is behind the perceived decline.

"The reduced figure doesn't mean the problem in the financial industry has been alleviated," he said, adding that banks and judicial departments should pay greater attention to preventing fraud.

The report also showed that fraud involving fundraising surged from 2016 to 2018, while some other financial crimes went down.

"Private loans and funding, especially via popular online platforms, are in fact difficult to control," said Jiang, the judge.

"Warning people to be prudent when buying online financial products that promise to pay 10 percent interest rates is all I can do to alleviate the problem. Other than that, I haven't found a better solution."