Microloans monitored for crime

To combat illegal fundraising, including fraudulent peer-to-peer microlending, Beijing has set up a monitoring platform that uses big-data technology.

Shen Hong, vice-consul of the Beijing Bureau of Financial Work, said the capital has seen fast growth in such fundraising since last year, and it is getting harder to identify problem companies since the Internet provides a smoke screen for their activities.

“Those who participate in illegal fundraising tend to register companies in Beijing, especially in Chaoyang and Xicheng districts, and conduct fundraising around the country,” Shen said.

The bureau had identified 221 cases of illegal fundraising activity involving more than 36 billion yuan ($5.8 billion) by the end of May.

By the end of April, the monitoring platform had identified more than 400 companies at high risk of getting involved in such activities.

Of those, 35 companies — five peer-to-peer Internet lending platforms, 20 private equity funds and 10 third-party financial platforms — have been reported to police and are under investigation.

With the development of technology that provides diversified payment channels and convenient communication tools, it is getting harder to detect illegal fundraising, Shen said.

Peer-to-peer lending websites, known as P2P, which provide microloans outside of the traditional lending system, are a prime target for the city’s efforts.

“Take P2P Internet lending platforms, for example,” Shen said. “Beijing is estimated to have more than 180 P2P platforms, and among those, 20 are suspected of fraud, which means more than 10 percent of P2P platforms in Beijing have problems. This is a bad trend and it has to be curbed effectively.”

The monitoring platform can automatically search the Internet for more than 1,000 key words used in illegal fundraising and calculate the results based on elements such as earning ratios. If a site surpasses a certain level, it will trigger a warning and further investigation.

“This is a way for us to prevent illegal fundraising from the beginning,” Shen said.