Study On Legal Regulations Of Financial Institutions' Private Banking

Earth-shaking changes have taken place in China since the reform and opening up. Personal properties accumulate in step with the national wealth, which lead to the constant expansion of financial service in market demand. At the same time, such demand has also undergone profound changes. We can see that the market, which started with the scale of simply disposition for interest, now has developed into places which can provide various financial services, such as securities, fund and trust. The service is all-dimensional and multi-storied. Due to this, private banking service has sprung up in China silently, and is booming in these years. Numerous foreign banks Chinese-funded banks, as well as other financial institutions vie to occupy a place in the market.As the private banking business is just beginning in China, there is no uniform definition of its concept, content, features, and there is also no institutional supply about the market access for financial institutions and the definition of qualified investors.The private banking experience of financial institution shows that its products and services are diversified far beyond people's imagination, but at the same time, the increasing number of legal disputes following. The emergence of financial innovations needs follow-up legal system urgently. At present, Commercial Bank Personal Financial Services Interim Measures and Commercial Bank Risk Management Guidelines for Personal Financial Services play the role of guiding norms to conduct private banking business in some respects, however, the legal that norms personal financial services can't adapt to the development of private banking business to some extent because of the difference between private banking and personal financial services.In the country, the financial institution engaged in private banking business is known as Private Bank. In the Chinese context, the term private contains the meaning of privately-owned, and the private bank can easily be mistaken for privately-owned bank. This conceptual confusion affects the conduct of private banking business to a certain extent. Actually, the content of private banking business is very rich, which includes both increasing the value of wealth and inheritance of wealth. From the time point of view, the private banking business can run through the investor's all life, and form the space point of view, it can help investors allocating resources globally. It has the characteristics of high threshold, personalized, comprehensive, strong confidentiality, and these characteristics distinguish it from personal financial services in general.The needs of investors and financial institutions provide a necessary precondition, and the rapidly growing economy, the continuous improvement legal system and financial markets provide material and institutional basis to conduct private banking business. The private banking business germinated in Europe hundreds of years ago, but modern sense of the private banking business was beginning in Switzerland, and the Banking Act did a clear distinction between institutions in private banking business and ordinary banks. Now, the financial institutions that conduct private banking business outside borders include universal banks, investment banks, family offices and other specialized agencies, which offer private banking business advantages and disadvantages. Combining with the current situation of private banking business, the business scope of financial institutions should not be a bridle to the development of private banking business. It is just because of the characteristics of various financial institutions, which makes it to provide a unique private banking business.The subject of private banking business legal relation consists of regulatory authorities, financial institutions and investors. The relationship between regulatory authorities and financial institutions is a vertical management relation, and the relationship between financial institutions and investors is a horizontal financial relation, therefore, the legal relation of private banking business belongs to the category of economic legal relationship. By examining the development situation of private banking business overseas, it was found that the legal relations between financial institutions and investors are no more than three cases, which contain realizing unified supervision, completing anti-money laundering legal system and attempting to establish a compensation mechanism, establishing private banking access system to eliminate the opportunities of unqualified financial institutions and investors to participate in banking business, improving confidentiality of customer information and clearing the scope of customer information, exceptions to confidentiality and the liability of breach of confidentiality, improving the government-led type of personal credit information system and transform to a market-oriented type gradually. On the other hand, we should improve the internal prevention and control mechanism of the legal risks of private banking business, including, reviewing the compliance of private banking business strictly, understanding customer and do not trade with unidentified customer, establishing legal risk management system in financial institution, being within the law of information disclosure, strengthening the capability of legal department, improving the techniques.The goal of the private banking business legal mechanism is to protect the interests of investors. Only a fair and effective protection to investors, financial institutions can get more investment from investors, and then gain greater benefits. If the legal mechanisms can not protect the interests of investors well, the whole private banking market will collapse. Therefore, the investor is the foundation of the development of private banking business.