People’s Bank of China Revokes Prepaid Provider’s License (Jan. 7, 2016)
The People’s Bank of China (PBC), the country’s central bank, this week has revoked the license of Shanghai Chang Gou Enterprise Services, a prepaid card-issuing company, preventing it from selling prepaid cards, according to Reuters. The PBC revoked Chang Gou’s license, which was issued in 2011, after the PBC alleged the company had misappropriated clients’ money, concealed capital flows, forged financial documents and refused inspections.
The PBC began issuing licenses in May 2011, and a total of 250 nonbank institutions were granted the right to conduct payment operations in the country. Two years later, the central bank issued new third-party payment licenses to 27 companies, 19 of which were permitted to issue open-loop prepaid cards.
A statement by the PBC didn’t specify how much money its rules require to be held in special accounts, but it’s alleged that a Chang Gou executive transferred up to 30 million yuan (US$4.5 million) to a relative’s bank accounts, according to Caixin, a Chinese business and finance media outlet. It also has been reported that police have apprehended the person in charge of the company. Cardholders haven’t been left completely out in the cold over the company’s alleged mishandling of funds. The PBC has said Chang Gou cardholders can get 85 percent of their money back from an asset management company that’s a subsidiary of Bank of Communications.