(Yicai) April 25 -- In the latest draft revision of its accounting law, China proposed to increase the fines for financial fraud.

Businesses with over CNY200,000 (USD27,600) in illicit gains will be fined an amount equal to 100 percent to 1,000 percent of the total illegal gains, according to the draft reviewed by the Standing Committee of China's National People's Congress, the country’s top legislative body. Businesses with less than CNY200,000 in illicit gains will be fined between CNY200,000 and CNY2 million (USD276,000). 

Individuals involved in financial fraud will be fined CNY100,000 to CNY500,000, the draft also showed. Severe violations can be punished with fines of between CNY500,000 and CNY2 million. Law-breaking accounting employees could be banned from accounting jobs for five years.

According to China's current accounting law, businesses cooking the books are fined up to CNY100,000, with the fine against law-breaking individuals capped at CNY50,000 (USD6,900).

The revision will significantly increase the punishment against financial cheating, helping eradicate financial fraud from the sources, Li Baixing, an accounting professor at Capital University of Economics and Business, told Yicai.

Listed firms' financial cheating is doing increasingly big harm to the development of the capital market, Li noted. For example, the financial frauds of China Huarong Asset Management and China Evergrande, which happened in recent years, not only caused losses among investors but also brought huge losses to their lenders, suppliers, and clients, he added.

In 2020, China also raised the fines for fraud related to the securities industry. Since that year, the maximum fine against listed firms' financial frauds has increased to CNY10 million (USD1.4 million) from CNY600,000. 

Editors: Dou Shicong, Futura Costaglione