The China Banking Regulatory Commission (CBRC) has issued a circular urging all banks in the country to exert greater efforts and adopt substantial measures to prevent and control risk of fraud.

According to a CBRC release on Sunday, banks have encountered frequent and major cases of fraud, causing huge losses due to lack of supervision, failure to punish malfeasance and weakness in risk and internal control.

Leading management staff and those who are held responsible must be dealt with and punished, it said.

The public should also be given access to reports on the occurrence of these cases, according to the circular, which included 13 instructions for banks' management and control of risk.

On the same day, Xinhua published an interview with a CBRC spokesperson, who said the instructions were based on a survey of banks conducted by the People's Bank of China, the central bank.

The spokesperson expressed hope that the circular would help the CBRC in its supervisory role and prevent further bank fraud.

The reports came a day after confirmation of the latest arrest of a bank employee in connection with fraud. According to local police on Saturday, Zhai Changping of the Dalian branch of the Bank of China in the northeast province of Liaoning, was arrested and charged with embezzling US$6 million.

Zhai had allegedly been embezzling money starting from 1999 while working on data input, local police said.

Police did not reveal how he managed embezzlement so much, but said that further investigation is under way.

(Xinhua News Agency March 28, 2005)