In Depth: China Fleshes Out Telecom Fraud Rules to Ensure Punishments Fit the Crime

In August 2023, a man from Sichuan province, pseudonymously referred to as Luo Ye, encountered a job advertisement offering a minimum payment of 1,000 yuan with potential for more earnings. The ad led Luo to meet a stranger in Chengdu, who proposed using Luo's bank card for "processing transactions" purportedly to aid online streamers in avoiding taxes. Despite suspecting illicit activity, Luo believed his card’s daily transaction limit of 20,000 yuan wouldn’t draw much attention for money laundering. Tempted by the offer of a commission, Luo agreed, and 20,000 yuan was quickly moved through his account, earning him 1,200 yuan. [para. 1][para. 2][para. 3]

However, the repercussions were swift. Luo’s bank account was promptly frozen, and on August 15, law enforcement summoned him for questioning. Luo was informed that the funds processed through his account were proceeds from scams, leading to a 10-day administrative detention. Upon release, Luo found his financial situation crippled, with all his accounts frozen, leading to missed payments and overdue debts. Though he managed to partially restore access to one account with police assistance, his financial activities remained severely restricted, impacting his daily life. Luo has not received any formal notification about his penalties and faces a five-year sanction, leaving him uncertain of his appeal options. [para. 4][para. 5][para. 6]

In response to such issues, new regulations titled the Joint Disciplinary Measures Against Telecommunications Network Fraud and Related Illegal Activities were introduced on December 1, 2023, aiming to clarify processes and penalties related to telecom fraud. These measures necessitate official written communications for penalties, outlining reasons, duration, and procedures for appeal. They incorporate a tiered punishment system, potentially imposing financial, telecommunications, and credit restrictions for individuals involved in fraudulent activities. [para. 7][para. 8][para. 9][para. 10]

Criminal charges can result in up to three years of sanctions, while illegal trading or habitual lending of bank or payment accounts can incur up to two years of restrictions. Restrictions limit cash withdrawal locations and specific online transaction capabilities, though essential payments are exempt. Sanctioned individuals may retain access to essential services and one phone card not involved in fraud. The regulations do not apply retroactively before the Combating Telecom and Online Fraud law's enactment on December 1, 2022. Luo hopes for reduced sanction periods under the new guidelines. [para. 11][para. 12][para. 13][para. 14][para. 15]

The introduction of these regulations highlights the issue of "aiding information network criminal activities," which became a prosecutable offense under an amendment in 2015. Despite being underutilized, efforts to intensify enforcement resulted in an increase in indictments for assisting crimes, along with new judicial interpretations on the presumption of knowledge in such offenses. This allows for better disruption of telecom fraud chains. Many telecom fraud activities have moved abroad, complicating enforcement, but those providing support from within China remain targeted by domestic crackdowns. [para. 16][para. 17][para. 18][para. 19][para. 20]

Long-term impacts of criminal convictions, such as restricted employment and educational opportunities, have been recognized as collateral consequences under the new measures. These actions aim to increase deterrence, formalizing previously informal sanctions and potential collective punishments. While some regions employed threats of welfare revocation for the families of offenders, the legal principle maintains that punishment should be personal. Experts see these new regulations as a significant step forward, ensuring written sanction decisions and clear channels for appeals, better safeguarding citizens' rights. [para. 21][para. 22][para. 23][para. 24][para. 25][para. 26]