Banking regulator tightens supervision

By Zhang Fengming  |   2008-6-20  |     NEWSPAPER EDITION

THE Shanghai banking regulator said yesterday it will strengthen supervision on banks' monitoring of fraud cases to prevent any irregularities and called for stricter punishment penalties.

Some banks have loosened their checks on fraud cases recently, said Yan Qingmin, the head of the Shanghai Bureau of the China Banking Regulatory Commission.

Banks in Shanghai have performed well in curbing fraud last year as there were no cases involving more than 1 million yuan. However, it's not time to relax as challenges loom ahead, Yan said in a statement.

Some banks don't view the need for such monitoring as a long-term requirement while some banks didn't follow existing internal risk control rules, the regulator said.

Several fraud cases took place at banks' branches or subbranches in recent years, a reflection that some lenders didn't have effective management and control of these outlets.

Yan also said that the banks' internal checks, including on-spot ones, were not effective as most fraud cases were disclosed by outside sources.

Penalties should be harsher with people directly involved in fraud and bank executives in charge having to take responsibility, he said. He favored a reward system for whistle-blowers. The regulator will tighten its supervision on the banks' fraud prevention work in the second half of the year.