In what year was the crime of professional lending traced back?

Since 2017, national financial regulatory policies have been adjusted and regulations on private lending have become increasingly strict. As the state intensifies its sanctions and crackdowns on professional lenders in private lending activities, judicial authorities have become increasingly clear in their requirements for discovering and screening professional lenders. At present, the number of civil supervision cases involving professional lenders continues to increase. It is an important task for the civil prosecution department to strengthen the identification and research of professional lenders and straighten out the review rules for such cases.

1. Legal Regulations on Professional Lenders The so-called "professional lenders" refer to "without approval, for business purposes, by providing funds to unspecified objects in society to earn high interest rates, Legal persons, unincorporated organizations and natural persons who engage in recurring loan business without authorization." After sorting out the relevant laws, regulations and judicial interpretations on professional lenders, professional lenders will have a series of negative evaluation consequences after being identified.

(1) Financial illegality of professional lenders The financial laws that regulate the illegality of professional lending can be traced back to the 2007 Banking Supervision and Administration Law. Article 19 of the Law stipulates that without the approval of the banking regulatory agency of the State Council, no unit or individual may establish a banking financial institution or engage in the business activities of a banking financial institution. In the early days of the promulgation of this law, there were still different opinions on whether professional lending activities were “business activities of banking financial institutions”. In December 2017, the Office of the Leading Group for the Special Rectification of Internet Financial Risks and the Office of the Leading Group for the Special Rectification of P2P Online Loan Risks jointly issued the "Notice on Regulating and Rectifying the "Cash Loan" Business", requiring the establishment of financial institutions and those engaged in financial services. Activities must accept access management in accordance with the law. No organization or individual is allowed to operate the lending business without obtaining the qualifications to operate the lending business in accordance with the law. As a result, the financial illegality of professional lending behavior was clarified. In April 2018, the China Banking and Insurance Regulatory Commission, the Ministry of Public Security, the State Administration for Market Regulation, and the People's Bank of China issued the "Notice on Matters Concerning Regulating Private Lending and Maintaining Economic and Financial Order" stating that "without the approval of the competent authorities in accordance with the law, any Units and individuals are not allowed to establish institutions that are or are mainly engaged in the business of granting loans or to make the grant of loans as their daily business activities." The notice emphasizes that for using illegally raised funds to issue private loans, obtaining funds from financial institutions and transferring them to loans at high interest rates, illegally issuing loans to school students, issuing loans without designated purposes, and actually charging high interest rates in the name of providing services or selling goods ( Fees) and other illegal activities such as disguising loans must be severely cracked down on. In short, starting from 2018, the financial authorities “required a strict crackdown on illegal private lending activities, including professional lenders.”

(2) Criminal illegality of professional lenders Since my country launched a special campaign against gangs and evil in January 2018, illegal lending factors in crimes involving gangs and evil have become increasingly prominent. In order to punish illegal lending criminal activities in accordance with the law, effectively maintain the order of the national financial market and social harmony and stability, and effectively prevent illegal lending from triggering gang-related and evil-related and other illegal and criminal activities, in 2019 the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of Public Security, and the Ministry of Justice Article 1, paragraph 1, of the "Opinions on Several Issues Concerning the Handling of Criminal Cases of Illegal Lending" stipulates that in violation of national regulations, without the approval of regulatory authorities, or beyond the scope of business, for the purpose of profit, regular loans are issued to unspecified objects in society. , disrupting the order of the financial market, and the circumstances are serious, he will be convicted and punished for the crime of illegal business in accordance with the provisions of Article 225, Item 4 of the Criminal Law. Since then, professional lending has begun to be regulated by criminal law. Regarding the statute of limitations for the prosecution of professional lending-type illegal business crimes, Article 8 of the Opinion stipulates that for illegal lending activities that occurred before the implementation of the Opinion, in accordance with the Supreme People's Court's "Notice on Relevant Issues Concerning the Accurate Understanding and Application of "State Provisions" in the Criminal Law" 》Provisions for handling. That is to say, as for "other illegal business activities that seriously disrupt market order" as stipulated in Article 225, Item 4 of the Criminal Law, if the judicial interpretation does not clearly provide for it, it should be decided after seeking instructions from the Supreme People's Court level by level as a matter of legal application. Based on the statutory penalties and the principle of leniency and leniency, professional lenders before the implementation of this interpretation cannot in principle be held criminally responsible.

(3) The lending behavior of professional lenders should be deemed invalid. Article 10 of the Supreme Court's "Interpretation of Several Issues Concerning the Application of the Contract Law of the People's Republic of China (1)" (invalidated) It stipulates that if the parties enter into a contract beyond the scope of their business, the court will not determine that the contract is invalid. However, violations of state business restrictions, franchises, and laws and administrative regulations prohibiting business operations are excluded. In 2017, the Supreme People’s Court confirmed for the first time that Article 19 of the Banking Supervision Law was an effective mandatory provision in the appeal case of Dalian Gaojin Investment Co., Ltd. and others versus Dalian Dexiang Real Estate Development Co., Ltd. The regulations on industry access are directly related to the national financial management order and social capital security, and are related to the interests of the public." In 2019, the Supreme People's Court's "Minutes of the Civil and Commercial Trial Work Conference of National Courts" (hereinafter referred to as the "Nine Minutes") elevated the above adjudication rules to judicial guidance. Article 53 stipulates that private lending activities conducted by legal persons engaged in private lending that have not obtained lending qualifications in accordance with the law, as well as unincorporated organizations or natural persons engaged in private lending, shall be deemed invalid in accordance with the law. On August 18, 2020, the Supreme People's Court revised the judicial interpretation of private lending, further elevating the effectiveness level of the aforementioned judicial policies to judicial interpretation. The revised interpretation adds an additional circumstance for the invalidation of private lending contracts stipulated in Article 14: "A lender who has not obtained the lending qualification in accordance with the law provides loans to unspecified objects in society for the purpose of profit", that is, the professional lender's The lending behavior should be deemed invalid. Since then, the administrative, criminal, and civil legal regulatory systems for "professional moneylenders" have been formally formed. Guided by the above-mentioned laws, regulations and judicial policies, in recent years the higher courts of some provinces and municipalities have also issued or countersigned some judicial documents on cracking down on professional lenders.

2. Identification Standards for Professional Lenders Article 53 of the "Nine Minutes of the People" clearly states: "If the same lender repeatedly engages in paid private lending activities within a certain period of time, it can generally be regarded as professional lending. People. "According to relevant laws, regulations and policy documents, professional lenders should have at least three basic characteristics: illegality, business nature and profit-making.

(1) Determination of "illegality" The so-called illegality means that professional lenders must be lenders (including legal persons, unincorporated organizations or natural persons) who have not obtained lending qualifications in accordance with the law. Since he has not obtained the qualification to lend money in accordance with the law, but he has engaged in commercial lending activities, it is illegal to engage in financial business activities. On the contrary, if one has obtained the qualification to lend money in accordance with the law, even if he repeatedly engages in private lending activities within a certain period of time, he cannot be recognized as a professional lender. On November 9, 2020, the Supreme People’s Court stated in an approval that “after soliciting the opinions of the financial regulatory authorities, small loan companies, financing guarantee companies, regional equity markets, pawn shops, and financial leasing supervised by local financial regulatory authorities Seven types of local financial organizations, including companies, commercial factoring companies, and local asset management companies, are financial institutions established with the approval of the financial regulatory authorities. Disputes arising from their engagement in related financial businesses do not apply to the new judicial interpretation of private lending." Therefore, the above-mentioned seven types of local financial organizations are not considered professional lenders if they have obtained lending qualifications upon approval.

(2) Determination of "business nature" The criteria for determining "business nature" can be grasped through keywords such as within a certain period of time, multiple repetitions, and unspecified objects. First, professional lenders engage in lending behavior multiple times within a certain period of time. As for the specific period and frequency, neither the "Nine Minutes of the People" nor the relevant judicial interpretations provide detailed provisions. Since the standard for criminal conviction is “lending funds to unspecified persons (including entities and individuals) more than 10 times in the form of loans or other names within 2 years”, the identification of professional lenders in financial management and civil justice should not be stricter than the criminal identification standard. The "Nine People's Minutes" clearly states that the high courts in places where private lending is more active or the intermediate courts authorized by them can formulate specific identification standards based on the actual conditions of the region.

For example, the identification standard announced by Jiangsu Province is “more than 5 private lending cases filed with courts at all levels in the province within one year”, and the identification standard announced by Tianjin is “more than 5 private lending cases filed with the city’s courts within two years, or the lender Lending funds to unspecified persons in society more than three times within two years." In the private lending dispute case between Yu v. Li and Hou, the court found that Yu, as the plaintiff, filed 1 private lending lawsuit in 2017, 4 private lending lawsuits in 2018, and 2 confirmed the validity of people's mediation agreements. In 2019, two private lending lawsuits were filed. Based on this, the court determined that Yu’s lending behavior was commercial and therefore the private lending contract was invalid. Secondly, the lending targets of professional lenders must be unspecified targets in society. Those who only lend funds to specific targets such as relatives, friends, and employees within the company cannot generally be recognized as professional lenders. However, those who extend loans to unspecified objects through specific objects such as relatives, friends, and internal personnel of the unit, publicize it to the public, and simultaneously extend loans to unspecified multiple people and specific objects such as relatives, friends, and internal personnel of the unit, may be recognized as professional lenders. Thirdly, the identification of a professional lender does not require that the actor has no other occupation. The "Nine Minutes of the People" states that professional lenders "engage in private lending as a profession", which should be understood to mean that professional lenders use their lending income as their main source of income. It does not require professional lenders to only engage in lending and not have a normal occupation. In other words, a natural person with other professions who repeatedly engages in private lending activities within a certain period of time can also be recognized as a professional lender.

(3) Determination of "for-profit" According to the "Nine Minutes of the People", private lending activities that professional lenders engage in repeatedly must be "paid". First of all, private loan funds are borrowed for free, which does not meet the profit-making characteristics of professional lenders and cannot be recognized. In practice, attention should be paid to the situation where interest is not formally agreed but interest is actually charged. Secondly, the profitability of professional lenders does not require high interest rates. Professional lenders cannot be completely equated with loan sharks, nor are they necessarily perpetrators of “routine loans”. Even if the parties agree only on legal interest within the interest rate protection upper limit, as long as other standards are met, the lender can still be determined to be a professional lender.

3. Review points for civil prosecutorial supervision cases involving professional lenders: Professional lenders illegally engage in commercial lending activities, and their behavior disrupts the normal financial order and harms national interests and social public interests. Supervision by the procuratorate in accordance with its powers. In the process of handling cases by civil prosecutors, if clues are found about suspected professional lenders, they must be strictly examined in accordance with the law.

(1) Regarding the review of the number of loans, it is impossible to identify professional lenders in a single case. To review the clues of professional lenders’ cases, the first step is to review the number of loans. Since private lending does not require registration and is somewhat concealed, the most convenient way to review the number of loans is to search for related cases. As long as the same party has filed multiple private lending lawsuits within a certain period of time, the search purpose will be initially achieved and the two problems of frequency review and evidence collection will be solved at the same time. Retrieval of related cases can be carried out on the China Judgment Documents Online, or through information platforms such as Faxin and Weike Xianxian. However, the search results on these databases may be incomplete due to incomplete collection of judicial documents. The most standardized retrieval method should be to go to the court for inquiry with the inquiry procedures, and the results of the inquiry on the court's trial management system shall prevail. The number of cases inquired in the court should include arbitration awards involving the enforcement of private loan applications, cases of notarized creditor's rights documents and pre-litigation mediation cases. However, for lenders who make loans for business but do not recover debts through litigation, the review of the number of loans cannot be carried out through related case searches. It can only be done through other methods, such as investigation and interviews, questioning of insiders, and going to the arbitration committee to check whether there are Arbitration, going to the public security bureau to check whether there is a report record, etc. If the lender is involved in a criminal offense, it can also be reviewed from evidence in the criminal case.

(2) Regarding related party review Related party review includes both lender review and borrower review.