Finance Apps Come Under Closer Scrutiny From China Regulators
Chinese regulators are moving to tighten scrutiny of proliferating mobile apps operated by financial institutions such as banks, brokerages and payment providers amid growing concerns that such applications are putting users’ privacy at risk.
The National Internet Finance Association (NIFA), an industry self-regulatory body, picked 23 institutions from banking, securities, fund management, insurance and payment sectors to take part in a pilot program designed to put finance apps under formal oversight.
The selected institutions will be the first to register their financial service apps with NIFA by the end of this year. NIFA will document and review the apps and publish a list of approved apps, the association said in a statement after a Tuesday meeting in Beijing to launch the trial.
NIFA in the future will require all finance apps nationwide to register and will gradually set up mechanisms to share risk information, report misconduct and enhance business compliance.
Financial institutions and regulatory bodies should improve security management and risk monitoring mechanisms to better protect users’ privacy and prevent illegal collection of personal data, said Li Wei, technology director of the central bank at the Tuesday meeting.
The move came amid rising concerns that many mobile applications have illegally amassed users’ personal data, threatening citizens’ privacy. Authorities are stepping up efforts to crack down on apps’ privacy breaches. Finance apps have become a focal point of such violations. In January, several central government departments including the Cyberspace Administration, the Ministry of Industry and Information Technology (MIIT), the Ministry of Public Security and the State Administration for Market Regulation set up a joint force to inspect popular apps’ practices on data collection.
In November, the MIIT launched a crackdown on violations of user privacy by apps that will last until Dec. 20. The campaign will target issues such as sharing of personal information with third parties without consent and collecting personal data beyond consented scope.
The public security ministry said Wednesday that privacy violations were found in 100 apps during an inspection by the ministry since November. Violators include apps operated by China Everbright Bank, Tianjin Rural Commercial Bank and Bank of Tianjin.
The central bank is mulling setting up a regulatory framework for finance apps, according to a fintech industry development plan issued in August. Part of the efforts involve a registration system for apps and strengthened self-regulation in the industry, said Lu Shuchun, secretary-general of NIFA, last month at a public forum on internet financial security in Beijing.
Caixin learned that the central bank issued a circular in late September requiring financial institutions to improve the security of their apps, launch risk assessments annually and strictly follow rules on data collection. Institutions are barred from accessing user data unrelated to their services and from storing personal data after usage.
Contact reporter Han Wei (email@example.com)
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