China Vows Tougher Crackdown on Financial Fraud Over Next Five Years

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(Yicai) Nov. 12 -- China’s Ministry of Finance has recently released a plan to intensify the fight against financial fraud over the next five years, as the misconduct continues to…

(Yicai) Nov. 12 -- China’s Ministry of Finance has recently released a plan to intensify the fight against financial fraud over the next five years, as the misconduct continues to pose a serious threat to capital market order and investor confidence, even as the initial results of earlier enforcement efforts begin to emerge.

The 15th Five-Year Plan for Accounting Reform and Development calls for continued inspections of accounting information quality in key industries and sectors critical to the national economy and people's livelihoods. With the goals of addressing existing cases and preventing new ones, authorities will severely punish illegal and non-compliant conduct, including fabricating business transactions, inflating profits to manipulate financial statements, and preparing false financial and accounting reports.

Regulators will also thoroughly investigate the networks behind financial fraud, hold third parties legally accountable for facilitating fraudulent activities and accelerate the resolution of existing cases. The plan further calls for a routine monitoring and early-warning mechanism, with greater use of Big Data and digital technologies to strengthen regulatory capabilities and prevent new cases at their source.

China will strengthen the enforcement capacity of financial departments and coordinate administrative enforcement with criminal penalties and civil compensation claims to maintain sustained pressure on financial fraud during the 15th Five-Year Plan period, which runs from 2026 to 2030, Lin Qiyun, director-general of the Ministry of Finance's accounting regulatory department, said at a press conference yesterday.

China will maintain a tough stance on financial fraud and step up inspections from 2026 to 2028, said Sun Feng, deputy director-general of the Ministry of Finance's supervision and evaluation bureau.

On the one hand, regulators will intensify accounting information quality inspections and crack down on violations such as fabricating…

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