CHI NAFR Penalty Discretionary Power

On Dec. 11, CHI NAFR drafted implementation measures re penalty.

  • CHI NAFR drafted Measures on implementing administrative penalty discretionary power, to regulate the exercise of administrative penalty discretionary authority.
  • Also ensure strict and fair law enforcement, maintain order in the financial industry.
  • Key Points
  • Include strict regulation of law enforcement actions and adherence to fundamental principles such as legal punishment, proportionality, and lawful procedures.
  • Provide guidelines for different levels of discretionary penalties (mitigating, lenient, moderate, and severe) in accordance with the revised Administrative punishment law.
  • Standardize criteria for fines, confiscation of illegal gains, especially for the banking, insurance industry; outline criteria, calculation methods for determining illegal gains.
  • Allow adjustments in application of measures in cases where there is apparent lack of fairness, obvious impropriety, or change in objective circumstances affecting criteria.
  • Effectiveness
  • The consultation is open until Jan. 10, 2023.
  • Mar. 2024 Measures Published
  • On Mar. 29, 2024, CHI NAFR published Measures on implementing administrative penalty discretionary power, as well as response to press, effective from May 1, 2024.
  • Most suggestions were accepted, including expanding scope of institutions, refining criteria for punishment severity, specifying liability and fine determination factors.
  • Measures are a significant step towards implementing the Administrative penalty law.
  • Specific enhancements include extending the statute of limitations for prosecuting offenses related to financial security and harmful consequences to five years.
  • Clear criteria are established for determining continuous illegal behaviors.
  • Specific scenarios for applying different levels of discretion, such as no punishment, mitigated punishment, lenient punishment, and severe punishment, are detailed.
  • Standards for fines, criteria for determining and calculating illegal gains are clarified.
  • Individuals engaging in illegal activities such as abusing authority, favoritism, or neglecting duty during exercise of penalty discretion, will be held legally accountable.

Regulators CHI NAFR
Entity Types Bank; Ins
Reference PR, RN NAFR No. 5 (2024), 3/29/2024; PR, CP 12/11/2023
Functions Compliance; Financial; Legal; Market Conduct; Operations; Reporting; Risk; Treasury
Countries China
Products Banking; Insurance
Regions AP
Rule Type Final
Rule Date 12/11/2023
Effective Date 5/1/2024
Rule Id 194428
Linked to N/A
Reg. Last Update 3/29/2024
Report Section International

Last substantive update on 03/30/2024