Joyce Wen and Teresa Huang
The Law of the People’s Republic of China on Combating Telecom and Online Fraud (hereinafter referred to as the “Law on Combating Telecom and Online Fraud”) was deliberated and adopted on September 2, 2022 and shall come into force on December 1, 2022. In recent years, telecom and online fraud criminal activities are frequent, thus the Law on Combating Telecom and Online Fraud has also attracted much attention as a special law for combating telecom and online fraud activities. The Law on Combating Telecom and Online Fraud has a total of 7 chapters and 50 articles, including general provisions, telecommunications governance, financial governance, Internet governance, comprehensive measures, legal liability, and supplementary provisions. This article introduces the important contents of the Law as follows:
1. Clarifying the definition of telecom and online fraud.
According to Article 2 of the Law on Combating Telecom and Online Fraud, telecom and online fraud means the act of fraudulently obtaining public or private property by telecommunications network technologies through remote, non-contact, and other methods for the purpose of illegal possession. The difference between telecom and online fraud and general fraud is that it is through the use of telecommunication network technical means.
2. Strengthening cross-sector linkage governance, and clarifying the legal responsibilities of the telecommunications, financial and Internet sectors.
Telecommunications business operators shall strengthen the supervision of network communication security and shall perform the following duties: to carry out the rules for the registration of phone users’ true identity information; to ensure that the number of phone cards opened to a customer shall not exceed the number restricted by the state; not to sell the phone cards to a customer who fails to pass the risk assessment, to restrict or suspend the functions of the phone cards held by a customer who fails to pass the real-name verification; and not to illegally manufacture, buy or sell, provide, or use any equipment or software used for committing telecom and online fraud and other illegal and criminal activities.
Banking financial institutions and non-bank payment institutions shall perform the following duties: to ensure that the number of bank accounts opened by a customer shall not exceed the number prescribed by the applicable provisions issued by the state; to establish a risk prevention and control mechanism for abnormal circumstances in the opening of corporate accounts; to improve the monitoring mechanism for abnormal accounts and suspicious transactions; to ensure the authenticity and integrity of transaction information and the consistency of transaction information in the whole process of payment; and to establish and improve the immediate fund inquiry, urgent payment stopping, rapid freezing, timely unfreezing and fund return mechanisms.
Internet service providers shall perform the following duties: to strictly verify users’ true identity information when providing Internet access, network address translation, domain name registration, server hosting, cloud services, online games, live webcast publishing and other services; to restrict or suspend abnormal accounts involving fraud; to require those who set up Internet applications to go through licensing or filing procedures; to verify the authenticity and accuracy of domain name registration and resolution information and Internet protocol addresses; to realize the traceability of domain name resolution, jumping, conversion records and not to provide support or help for others to commit telecom and online fraud activities.
3. Cracking down on cross-border telecom and online fraud.
Article 3 of the Law on Combating Telecom and Online Fraud stipulates that the provisions of the Law on Combating Telecom and Online Fraud shall apply to the telecom and online fraud committed by citizens of the People’s Republic of China outside the territory of China and any overseas organization or individual that commits telecom and online fraud within the territory of the People’s Republic of China or provides any product, service, or other assistance for others’ commission of telecom and online fraud within China. At the same time, the Law on Combating Telecom and Online Fraud clarifies the measures of exit restrictions, and provides that immigration administrative authorities or public security organs may decide not to allow any person who plans to travel to areas with serious telecom and online fraud activities and are suspected of involving significant telecom and online fraud activities, or who has received criminal punishment for committing telecom and online fraud activities to leave China.
4. Linking with the Personal Information Protection Law.
In recent years, most of telecom and online fraud criminal activities are related to the leakage of personal information. Therefore, the issue of personal information protection is also re-emphasized in the Law on Combating Telecom and Online Fraud. The Law on Combating Telecom and Online Fraud stipulates that personal information processors shall regulate the processing of personal information, strengthen the protection of personal information, and establish a mechanism to prevent personal information from being used for telecom and online fraud in accordance with the Personal Information Protection Law of the People’s Republic of China and other legal provisions. Departments and units performing personal information protection duties shall implement key protection for logistics information, transaction information, loan information, medical information, and marriage information that may be used by telecom and online fraud.
In addition, the Law on Combating Telecom and Online Fraud provides for clear legal liability for various types of violations of the Law. The Law, together with the Civil Code of the People’s Republic of China, the Cybersecurity Law of the People’s Republic of China, the Personal Information Protection Law of the People’s Republic of China, and the Anti-Money Laundering Law of the People’s Republic of China, will provide all-round legal support for combating telecom and online fraud crimes and provide effective prevention and control of telecom and online fraud crimes.
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