Chinese private investment funds will conduct a "self-inspection" of their business practices in compliance with a directive from the State Council, China's cabinet, according to a notice posted on the website of the Asset Management Association of China.

The scope of the inspection will include advertising practices, fundraising from prohibited investor classes, and other prohibited practices. The inspection initiative follows a finding by China's securities regulator that some funds had regularly violated regulations, the Association said.

The notice also requested the funds to strengthen their internal risk management and to boost training in awareness of regulations and societal responsibility.

China's finance sector has been under increased regulatory scrutiny following the dramatic stock crash in 2015 which was blamed in part on poor regulatory oversight. Regulatory attention on irregular fundraising and advertising procedures by private funds and so-called P2P lending platforms has also intensified in 2016.