Chinese police to step up crackdown on financial crime

BEIJING (Reuters) - Chinese police will intensify a crackdown on financial crime to safeguard national security and fend off financial risks, the public security ministry said in an online statement on Tuesday.

The ministry has launched a number of targeted actions to clamp down on illegal fundraising, financial frauds, pyramid schemes, fake currencies, underground banks and bank card crimes, it said.

The crackdown comes at a time when Beijing is paying more attention to tighten regulation and rein in risky and illicit practices in the financial sector as China's central bank governor warned of "hidden, complex, sudden, contagious and hazardous" latent risks accumulating in the system.

The ministry said it will focus on crimes involving illegal fundraising, the online finance industry, securities and futures markets, and financial institutions.

China's State Council issued draft rules targeting illegal fundraising in August.

In September, a Beijing court sentenced the architect of the $9 billion Ezubao online financial scam to life imprisonment, and handed down jail time to 26 others, marking the close to one of the biggest Ponzi schemes in modern Chinese history.

Ezubao, once China's biggest P2P lending platform, folded last year after it turned out to be a Ponzi scheme that collected 59.8 billion yuan ($9.14 billion) from more than 900,000 investors through savvy marketing.

Last year, Chinese police busted more than 380 underground banks, involving more than 900 billion yuan ($135.97 billion), and arrested more than 800 suspects.

(Reporting By Shu Zhang and Ryan Woo; Editing by Michael Perry)