China passes anti-fraud law on telecommunications and online

With more than 1 billion Internet users and the largest global market for smartphones and personal computers, China is fertile ground for fraudulent apps to proliferate. The law against telecommunications and online fraud will take effect from December 1.

The law stipulates that telecommunications service providers must force phone users to register their real names and provide identity cards. Providers are not allowed to sell new sims to people who already have sims and carefully check subscribers if they find any abnormalities. Financial institutions and non-banking payment service providers must have a strict customer appraisal system when opening a bank account or payment account; at the same time, taking risk management measures to prevent bank accounts and payment accounts from being used for fraud.

These units are also entitled to verify the identity of the customer and refuse to open an account if in doubt. The law stipulates that departments, branches, businesses and local governments must coordinate actions, inter-sectoral and inter-provincial cooperation to crack down on crimes.

According to the Cyberspace Administration of China, since the beginning of the year, the agency has removed nearly 45,000 fake applications, nearly 4 million websites and more than 500,000 illegal applications. JD Finance alone, one of the largest online lenders, has more than 5,600 fake applications.

In recent years, the use of apps for online fraud accounted for nearly two-thirds of all telecom fraud cases in China. These scam apps often impersonate online payment platforms. Therefore, the strict management of bank account registration, phone sim and responsibility of Chinese authorities is expected to significantly reduce the number of fraud cases.