China

The Commercial Banking Law of the People's Republic of China is an entirely functional mechanism that regulates the licensing, operations, and risk management practices of all banking establishments in Mainland China. The system was first created back in 1995 and operates on the basis of a very aggressive and modern restructuring carried out by the National Financial Regulatory Administration (NFRA) and the People's Bank of China (PBOC) – integrating old banking laws directly into the cross-sector Financial Law system [globallawexperts.com]. In order to protect the interests of general depositors and to prevent any financial breakdowns from taking place, the law imposes very strict segregation between commercial banking and speculative securities business, requires compulsory approval of any equity transfers that exceed 5%, and operates on a very tough "look-through" criterion. With the help of tough monetary punishments and an explicit institutional resolution hierarchy, the current system exercises substantial extraterritorial powers over illegal cross-border financing transactions targeting the Chinese domestic capital market.