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Abstract

Financial security is integral to national security, and addressing financial black and gray industries poses a significant challenge in managing and mitigating financial risks. These industries disrupt the orderly functioning of financial markets through illicit activities. Since 2021, they have expanded rapidly in China, resulting in substantial financial losses.  The rise of financial black and gray industries in China can be attributed to three main factors. Firstly, the rapid expansion of financial markets and the widespread adoption of Internet technology have provided fertile ground for these industries, especially in areas like online lending. Secondly, a lack of financial literacy among some consumers makes them vulnerable to illegal services such as credit manipulation. Lastly, economic downturn pressures have exacerbated debt problems, giving rise to demands for black and gray industry services like “anti-collection.”  Globally, financial black and gray industries generally show a trend towards professionalization, though the specific challenges vary from country to country. In developed countries, where personal credit systems are relatively well-established and regulatory oversight is stringent, financial crimes such as identity theft and online fraud remain prevalent. Given the unique characteristics of its market, China faces even more intricate challenges.  To address this issue, China has implemented distinctive governance approaches. The Chinese government prioritizes combating such illegal activities by enacting numerous laws and regulations to standardize market behavior and enhance governance efficiency through strengthened inter-agency cooperation, such as between financial regulators and public security authorities. Additionally, advanced technologies like big data analytics and artificial intelligence are employed to improve detection and prevention capabilities, establishing comprehensive risk control systems. Notably, China promotes the development of financial dispute mediation mechanisms aimed at reducing disputes caused by systemic loopholes or mismanagement through diverse resolution methods, thereby undermining the foundation upon which financial black and gray industries thrive. Moreover, it encourages the participation of all societal sectors in the governance process, fostering an environment characterized by governmental leadership and social collaboration.  This report provides an in-depth analysis of various aspects related to the governance of financial black and gray industries in China. It covers definitions and classifications, causes and manifestations, consequences and impacts, and challenges and responses. The objective is to offer practical and innovative insights for further research and operational strategies in this field.

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  • Standard from IEEE_AC
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  • Document type: IS