As published on pinsentmasons.com, Friday 15 October, 2021.
China will continue to tighten regulation of large financial technology (fintech) companies to protect consumer privacy and data security.
China’s central bank will strengthen the regulation of payment sector and require all companies providing financial services to be licensed, the bank’s governor, Yi Gang, said in a speech at an international conference.
TMT expert Leo Xin of Pinsent Masons, the law firm behind Out-Law, said: “Fintech companies in China will face increased regulation and compliance challenges. From a data security perspective, these giant fintech companies holding huge amount of personal data will be considered as important data processors. The government may require companies to provide more access to their data, business processes, and product information. And the government will also limit such data-rich companies from going public overseas.”
Yi said China’s approach to regulating fintech businesses is based on three principles: financial businesses must be licensed to operate; different business such as insurance and wealth management must set up firewalls to prevent cross-sector risks; and the direct link between non-banks and banking information services must be cut.
According to Yi, the central bank has required technology businesses offering financial services to set up holding companies and to include all subsidiaries engaged in financial activities.
Chinese authorities have taken a series of recent measures on fintech regulation.
In August, China passed a new law on personal data protection which come into effect on 1 November. In June, China officially issued the Data Security Law, which became effective on 1 September.
In January, the central bank tightened its regulation of non-bank payment providers, restricting their activities against the backdrop of a rapidly developing payments sector.