The Legal Risks Of Private Banking Business In China And The Prevention Mechanism

Overseas, private banking business has been hundreds of years of history. In recent years, commercial banks compete to offer domestic and fierce competition in the emerging business. Like other financial services, there are a number of legal risks in private banking business. The purpose of this article is to analyze the main legal risks of private banking business in China and to propose risk prevention strategies. Private banking business in China is facing double problems:external environmental risk and operational risk, as follows:(a) the lack of sound regulatory legal system, (b) compliance risks in the separate operation mode, (c) the lack of market access standards, (d) conflicts among the stipulations about money laundering crime, confidentiality of customer and personal credit system, (e) the lack of internal control mechanism as well as international cooperation and coordination. To promote the healthy and orderly development of private banking business, the risk prevention strategies should be taken into consideration, which include:(a) improving laws and regulations, (b) putting mixed operation mode into practice, (c) establishing market access standards, (d) consummating anti-money laundering law, the systems of financial privacy and personal credit, (e) strengthening international cooperation and coordination, (f) forming sound internal control mechanism.