White-Collar Crime 2024 Comparisons

The sub-chapters of the PRC Criminal Law categorise the main criminal offences into ten types based on the legitimate interests they violate. The PRC Criminal Law does not specify the criteria for the division between misdemeanours and crimes. In practice, all offences that could be sentenced to less than three years’ imprisonment are regarded as misdemeanours, while crimes punishable by more than three years’ imprisonment are regarded as felonies.

According to the recent work reports of the Supreme Court and the Supreme Protectorate, the absolute number of serious violent crimes is decreasing while the rate of misdemeanours is increasing year by year. With the high frequency of amendments to the Criminal Law, many new misdemeanour crimes have been added, and a large number of violations have been criminalised. Prosecutors and law enforcement agencies have also demonstrated a more active attitude in combating misdemeanour behaviour.

Generally speaking, white-collar crimes refer to criminal offences where the defendant (i) breaches their legal duty as a public official, or (ii) takes advantage of their position to seek illegitimate interests.

The most commonly seen white-collar crimes could include the following five categories:

• crimes related to corruption and bribery (eg, the crimes of accepting bribes by public officials, offering bribes to public officials, accepting bribes by non-public officials, offering bribes to non-public officials, bribing through influence peddling, misappropriation of corporate funds, etc);
• abuse of privilege of position (eg, the crime of abuse of public office duties, abuse of duty by personnel from state-owned enterprises and institutions, leaking state secrets, retaliation, false imprisonment, illegitimate search and seizure, etc);
• negligence of duty by public officials (eg, the crime of negligence of duty by public officials, negligence of duty by personnel from state-owned enterprises/institutions, and personnel from state-owned enterprises and institutions committing fraud in contract signing, etc);
• fraud for personal gains (eg, selling shares of state-owned assets at under-valued or discounted prices, illegitimate approval of eminent domain, confiscation or occupancy of land, illegitimate transfer of land use rights at low prices, etc); and
• miscellaneous (eg, damaging the interests of a listed company by breach of fiduciary duty, insider trading, soliciting and defrauding investors to purchase or sell securities or futures, illegitimate issuance of financial instruments, illegitimate approval of bank loans, etc).

Under the general principle of the PRC Criminal Law, the constituent elements of crimes include (i) an object (the damaged interests); (ii) objective aspects (actus reus/guilty act); (iii) a subject (who commits the crime); and (iv) subjective aspects (mens rea/guilty mind). To establish a criminal offence, prosecutors have to establish the concurrence of a physical act and a mental state, as well as harmful results and causation. However, for each specific criminal offence, the sub-chapter of the PRC Criminal Law defines its respective constituent elements.

According to the PRC Criminal Law, a person may be held liable for an attempted offence, even if the crime is not completed. Similar to common law theory, a criminal attempt is an act that, despite the intention of committing a crime, falls short of completing the crime. An attempt consists of three elements: (i) a specific intent to commit the crime; (ii) an overt act in furtherance of that intent; and (iii) failure to complete the crime due to circumstances beyond the defendant’s control, as opposed to voluntary suspension by the offender. To commit an attempted offence, the defendant must have committed an act beyond the mere preparation to commit the offence. The overt act must constitute a “substantial step in the course of a planned conduct to culminate in committing the crime”. For example, in a case where a bribe offeror attempts to offer a bribe to public official A, and, after the bribe offeror pays the bribe to A, it turns out that A is not a public official. In this case, the bribe offeror still commits the crime of attempting to offer a bribe to a public official, despite the fact that A is not a public official. In other words, the defence of factual impossibility is not available for the attempted crime in this case.

Notwithstanding the above, the punishment for an attempted crime could be less severe than for a completed crime.

According to the general principle of the PRC Criminal Law, a criminal suspect is presumed innocent until proven guilty. Therefore, the investigative authority shall bear the burden of proof during the investigation. The investigative authority shall collect all evidence relevant to the criminal case, including both evidence that could prove the defendant guilty or innocent, and evidence that could prove the severity of the criminal offence.

According to the PRC Criminal Procedure Law, the standard of proof is beyond reasonable doubt. However, the oversight commission applies a slightly different standard for burden of proof. According to the PRC Oversight Law, the standard for burden of proof for a criminal offence is beyond reasonable doubt, while the standard for burden of proof for misconduct by public officials is clear and convincing.

No one shall be presumed guilty until proven otherwise. The investigative authority shall collect all relevant evidence, including evidence to prove the guilt or innocence of the defendant. The judicial authority shall remain neutral and unbiased, assess the evidence submitted by both the investigative authority and the defendant, and adjudicate the case independently based on laws and established facts supported by evidence.

According to the PRC Criminal Law, the statute of limitations is calculated based on the maximum sentence of each criminal offence stipulated by the PRC Criminal Law. The statute of limitations could range from five to twenty years, or even longer upon approval by the Supreme Procuratorate.

For the main categories of white-collar crimes, the statute of limitations varies. For example, for the crime of accepting bribes by public officials, since the maximum sentence could be lifetime imprisonment or the death penalty, the statute of limitations could be twenty years; for the crime of offering bribes to public officials, since the maximum sentence could be lifetime imprisonment (no death penalty), the statute of limitations is twenty years; for the crime of accepting bribes by non-public officials, since the maximum sentence could be lifetime imprisonment, the statute of limitations is twenty years; for the crime of offering bribes to non-public officials, since the maximum sentence is imprisonment of no more than ten years, the statute of limitations is ten years.

Meanwhile, for the crime of offering bribes to an entity, since the maximum sentence is imprisonment of no more than three years, the statute of limitations is five years; and for the crime of offering bribes by an entity, since the maximum sentence is imprisonment of no more than five years, the statute of limitations is five years.

The new Criminal Law Amendment XII, effective in 2024, revised the maximum sentences and corresponding statutes of limitations for certain offences. For instance, prior to the amendment, the maximum sentence for offering bribes (between CNY30,000 and CNY1 million) was five years with a ten-year statute of limitations. In contrast, accepting bribes had a maximum sentence of less than three years and a five-year statute of limitations. Despite common belief that accepting bribes is more serious than offering them, the latter previously had a longer statute of limitations. Post-amendment, the maximum imprisonment for offering bribes has been reduced to less than three years, aligning its statute of limitations with that of accepting bribes at five years.

The statute of limitations begins running from the day the criminal offence is committed; if the criminal offence continues to occur, the statute of limitations starts running from the day the criminal offence ends. If the defendant escapes or conceals the criminal offence after the judicial authorities have established the case, the statute of limitations defence is not applicable in this circumstance.

In practice, the statute of limitations is the first consideration for a defence attorney. When a case is filed with public security bureaus, the attorney must check if the statute of limitations has expired. If it has, criminal responsibility cannot be pursued; however, this does not eliminate the existence of the criminal act itself – disciplinary penalties may still apply.

In 2018, the PRC International Criminal Judicial Assistance Law took effect, enabling reciprocal assistance between the Chinese government and foreign countries in inspecting, investigating, prosecuting, adjudicating, and enforcing criminal cases. This includes serving legal documents, collecting evidence, arranging witnesses, seizing or preserving property, forfeiture, and extradition.

The implementation regulations of this law came into effect on 22 April 2024. The regulations clarify procedural aspects, such as time limits for processing requests, and establish a schedule for foreign jurisdictions. Priority is given to matters categorised as “urgent” or those with significant impact; these must be resolved within thirty days of receipt. Additionally, the regulations improve co-ordination among external liaison institutions and relevant authorities while instituting a working office mechanism to facilitate criminal judicial assistance from Chinese entities.

In international criminal judicial assistance proceedings, governing authorities include the oversight commission, Supreme Court, Supreme Procuratorate, Ministry of Public Security, and Ministry of National Security. They are responsible for reviewing (i) requests made by the PRC government to foreign countries and (ii) requests from foreign countries to the PRC government.

Extradition remains a key method for the PRC government to pursue overseas fugitives.

A legal entity could be subject to criminal liability if the entity commits a “unit crime”. Under the unit crime doctrine, the person directly responsible (eg, legal representatives), other responsible person (eg, managers) and the company could be held liable for a criminal offence. Traditionally, the unit crime can be charged only when the sub-chapter of the PRC Criminal Law has explicitly provided for a unit crime in addition to the crime committed by an individual. In other words, in order to hold a company criminally liable, it is a pre-requisite to simultaneously hold the relevant personnel criminally liable. The unit crime is usually charged when the following three elements are met: (i) the decision is made collectively by the management of the company; (ii) the criminal offence is committed in the name of the company; and (iii) the criminal offence is committed for the benefit of the company.

However, there are some recent developments for the “unit crime”, where only relevant personnel are held criminally liable, while the company could be exempted from the criminal liability of the unit crime. For example, for unit crimes where the responsible personnel could be sentenced to imprisonment of no less than three years but no more than ten years, if the company satisfies the condition for non-prosecution due to compliance, the procuratorate will only prosecute the relevant personnel, and the company’s criminal liability could be exempted.

In the context of a merger and acquisition, if the management of the successor entity knowingly continues the criminal offences committed by the target entity, the successor entity could be held liable; but if the management of the successor entity completely ceases the criminal offence and successfully remediates the harm caused, the successor entity shall not be held liable for the criminal offences committed by the target entity prior to the acquisition.

According to the new Criminal Law Amendment XII, effective in 2024, the scope of criminal subjects in certain related crimes has been expanded. For example, in the crime of “illegal business operation of the same kind”, the criminal subject now includes not only “directors” and “managers” of state-owned enterprises but also directors, supervisors, and senior management from any company. Under the PRC Company Law, “senior management” refers to a company’s manager, deputy manager, financial officer, secretary of the board of directors for listed companies, and other personnel defined by the company’s articles. Additionally, judicial practice indicates that even if an individual is not formally designated as a manager or senior management in the articles of association, they may still be recognised as such by the courts based on their actual authority exercised within the company.

In judicial practice, public security and procuratorates are inclined to hold a company liable, mainly because monetary penalties such as fines and confiscation of property can be better enforced in the case of unit crimes in comparison to personal crimes.

When a defendant is deemed guilty of a white-collar offence by a criminal court, the court will follow the PRC Criminal Law and the judicial interpretations and refer to the rules and guidelines on penalty assessment, including but not limited to:

• the Opinions on Several Issues Concerning the Regulation of Sentencing Procedures;
• the Guiding Opinions on Sentencing Recommendations for the Handling of Cases Involving Pleading Guilty and Accepting Punishment by Procuratorates; and
• the Guiding Opinions on Sentencing for Common Crimes (Trial).

The criminal court has the discretion to decide on sentencing. However, in practice, it will usually adopt the sentencing recommendation by the procuratorate. The sentencing process shall be discussed and jointly decided by the criminal collegiate panel. The judgment shall be based on the majority opinion of the criminal collegiate panel.

According to the Guiding Opinions on Sentencing for Common Crimes (Trial), the rules for sentencing under plea agreement are as follows:

• If the defendant reaches a criminal settlement agreement or a plea agreement, the criminal liability can be reduced by a maximum of 50% of the base sentence, taking into consideration the nature of the crime, the compensation amount, the candidness and sincerity of the remorse and apology; and in case of minor offences, the criminal liability could be reduced by more than 50% or completely exempted.
• If the defendant pleads guilty and accepts the punishment, the criminal liability can be reduced by a maximum of 30% of the base sentence, taking into consideration the nature of the crime, the severity of the sentence, and the timing, extent, value and degree of the defendant’s remorse. If the defendant conducts self-disclosure, confesses material facts, voluntarily returns the illicit gains, or reaches a settlement with the victim and compensates the victim for losses, the criminal liability could be reduced by a maximum of 60% of the base sentence. Furthermore, in case of minor offences, the criminal liability could be reduced by more than 60% of the base sentence or completely exempted.

Additionally, under certain conditions, companies can avoid prosecution by implementing a “compliance plan”. Prosecutorial authorities may allow companies suspected of crimes but intending to establish a compliance system to propose a special compliance plan addressing illegal activities. This aims to enhance the corporate compliance management system, and as a result companies can potentially avoid prosecution. According to the “Guiding Opinions on Establishing Third-Party Supervision and Evaluation Mechanism for Corporate Compliance in Cases” (Trial) issued by the PRC Supreme Procuratorate, there are both positive and negative conditions for non-prosecution based on compliance.

Regarding positive conditions, a company must meet all three of the following criteria to qualify for the third-party mechanism: (i) the company and individuals involved plead guilty and accept punishment; (ii) the company operates normally, commits to establishing or improving its compliance system, and has basic requirements for activating the third-party mechanism; and (iii) the company voluntarily adopts this mechanism.

Regarding negative conditions, companies in respect of which any of the following apply are ineligible for this mechanism: (i) companies created solely for illegal activities; (ii) companies primarily engaged in criminal conduct after establishment; (iii) personnel committing crimes in the company’s name; (iv) suspected involvement in national security threats or terrorism; and (v) other unsuitable circumstances.

The victims of a white-collar offence have two legal grounds to claim compensation for their loss: (i) a criminal incidental civil litigation; or (ii) a separate civil litigation. Therefore, depending on the corresponding legal proceedings chosen by the plaintiff, both the criminal court and the civil court could have jurisdiction to allocate damages to the victims of a white-collar offence.

But in judicial practice, the scope for initiating incidental civil actions is relatively narrow. According to the PRC Criminal Law, if a victim suffers economic loss due to a criminal act, the offender must compensate for this loss in addition to facing criminal penalties. However, the PRC Criminal Procedure Law states that “if the victim has suffered material losses as a result of the defendant’s criminal act, he shall have the right to bring an incidental civil action during the criminal proceedings.” Thus, “economic loss” in the Criminal Law is limited to “material loss” in the Criminal Procedure Law.

Furthermore, relevant judicial interpretations from the Supreme Court indicate that victims whose personal rights are violated or whose property is damaged by a crime can initiate incidental civil litigation during criminal proceedings. This provision has been strictly interpreted to define “material loss” as “property damaged by the criminal”, excluding victims of white-collar crimes who do not suffer such losses from claiming incidental civil damages. Consequently, these victims need to wait for investigative authorities to recover proceeds of crime and seek compensation later.

In particular, there is ongoing controversy regarding the appropriateness of initiating incidental civil actions in cases involving intangible properties like intellectual property rights and trade secrets. It is argued that only tangible property can be “destroyed” and that “material loss” occurs solely after such destruction, excluding intangible assets from this category. However, following recent reforms in intellectual property case trials, some local high courts have begun to issue written opinions exploring the development of incidental civil litigation. Nonetheless, this remains a non-mandatory requirement.

In addition, class actions are admitted in the PRC courts. For example, according to the PRC Civil Procedure Law and the PRC Securities Law, representatives of plaintiffs of securities disputes arising from fraudulent misrepresentation, insider trading and market manipulation could file class actions at the competent court.

In China, there are no specialised police squads, judges or criminal courts for white-collar offences. The oversight authorities, the procuratorate, the public security bureau, and various administrative authorities have investigative powers against white-collar offences. The procuratorate is responsible for prosecuting white-collar offences committed by both public officials and non-public officials. The criminal courts are responsible for adjudicating white-collar crime cases.

The oversight commission is mainly responsible for investigating criminal offences and misconduct by public officials. The public security bureau is responsible for investigating other white-collar offences committed by non-public officials. In addition, administrative authorities, such as CSRC, finance, tax, foreign exchange, market regulation, customs and anti-monopoly authorities, also have investigative power for civil or administrative violation cases within the scope of their respective duties. For example, tax authorities can investigate tax evasion-related cases, CSRC can investigate misrepresentation cases during an IPO or issuance of securities, foreign exchange authorities can investigate cases on the usage of converted foreign currency registered capital, the anti-monopoly authorities can investigate monopoly agreements, etc.

In recent years, the central government has sought to enhance the transfer of cases from administrative to judicial authorities. When investigating administrative violations, if authorities identify potential criminal offences related to the destruction of economic order (eg, tax evasion, smuggling, financial fraud, intellectual property infringement) or obstruction of social order (eg, obstruction of justice, environmental resource destruction), they must refer these cases to public security bureaus for further investigation. Administrative authorities are prohibited from imposing penalties instead of transferring cases. The procuratorate and oversight commission will monitor this transfer process.

Additionally, there is an innovative reverse mechanism where the procuratorate can issue an opinion recommending administrative penalties if they choose not to prosecute and forward the case to relevant administrative authorities for action. This dual transfer system between criminal and administrative measures allows for more appropriate case resolutions.

The oversight commission, the procuratorate and the public security bureau initiate investigations upon (i) whistle-blower allegations; (ii) confession of an offender; or (iii) cases transferred by administrative authorities. The administrative authorities can initiate investigations in accordance with the law, including but not limited to (i) industry sweeps; (ii) regular on-site inspections; or (iii) investigations based on whistle-blower allegations from competitors, terminated business partners (vendors, suppliers, agents, etc), or disgruntled former employees.

Generally, the PRC Criminal Procedure Law governs criminal investigations. Various administrative authorities have issued rules for investigations initiated by entities like the China Securities Regulatory Commission (CSRC), finance, tax, foreign exchange, market regulation, customs, and anti-monopoly authorities. When these authorities identify potential criminal offences during administrative investigations, they must transfer cases to an oversight commission or public security bureau for further investigation. Public security bureaus are required to establish criminal cases upon receiving them from administrative authorities. The procuratorate and oversight commission monitor two situations: (i) cases not transferred by administrative authorities to public security bureaus, and (ii) cases that public security bureaus refuse to establish after receiving them. In practice, when transferring cases to public security bureaus, administrative authorities must provide sufficient evidence to support establishing a criminal case.

Additionally, when the condition “crimes committed by public officials in the exercise of public power” is met, certain crimes under the PRC Criminal Law not involving public officials also fall within the oversight commission’s jurisdiction. This includes embezzlement, misappropriation of funds, and bribery by non-state functionaries. Such conditions typically arise in two scenarios: (i) when criminal subjects include oversight commission members, and (ii) when supervisory subjects engage in joint crimes with non-supervisory individuals.

According to the PRC Criminal Procedure Law and the PRC Oversight Law, the investigative authorities usually have broad investigative powers to gather information and documents related to white-collar offences, including but not limited to, interrogating the suspects, interviewing witnesses, conducting deposition, search and seizure, examination, and authentication, etc.

During the criminal investigation proceeding, the investigative authority shall collect all relevant evidence that could prove the suspects innocent or guilty. Therefore, the investigative authority has the power to (i) require the company to produce documents, provided that the documents are relevant to the facts of the case; (ii) raid a company and search and seize the relevant documents; (iii) question employees, officers, and directors of the company under investigation, either through formal interrogation or less formal inquiries; or (iv) require employees, officers or directors of a company under investigation, or a third party, to participate in interviews.

The oversight commissions and the public security bureaus usually have much broader investigative powers than the administrative authorities because the oversight commissions and the public security bureau have the right to detain suspects, which the administrative authorities do not. In practice, the oversight commissions sometimes do not necessarily demand the maximum six-month detention period, while the duration of detention by public security bureaus is usually strictly limited by the PRC Criminal Procedure Law.

There is no legal obligation for a company to conduct an internal investigation in response to potential white-collar offences. However, it is common practice for companies to initiate such investigations when approached by enforcement authorities. This serves two main purposes: (i) to understand the facts and assess risks, and (ii) to co-operate with authorities by disclosing relevant information.

For instance, the Measures for Establishing, Evaluating, and Examining Compliance Programmes of Enterprises (Trial) highlight that a compliance programme with an effective internal investigation system is crucial in evaluating a company’s compliance efforts. The success of these programmes can impact prosecutorial decisions regarding arrests, prosecutions, coercive measures, or leniency recommendations.

Moreover, if criminal liability arises from an investigation by the public security bureau, according to the “Regulations on Procedures for Public Security Bureaus to Handle Criminal Cases”, a victim’s report does not automatically trigger the initiation of a case. The bureau must review whether there are “criminal facts necessitating liability”. A case file will only be established upon approval from the competent authority within the bureau.

Based on our experience in addressing white-collar crimes that threaten corporate interests, such as trade secret infringement, companies typically seek criminal proceedings for these violations. To achieve this, it is essential to provide comprehensive documentation to the public security bureau that demonstrates “criminal facts warranting liability”. Therefore, the corporation must implement strict internal investigative protocols for preliminary examinations and evidence collection.

The thoroughness of an internal investigation can significantly influence the outcome of a criminal case, including prosecution decisions and sentencing. Companies are thus encouraged to conduct detailed internal investigations not only to mitigate risks but also to potentially favourably impact the judicial process.

According to the PRC Criminal Procedure Law, the procuratorate is responsible for prosecuting crimes. Before prosecuting a criminal case, the procuratorate will assess whether (i) the facts of the criminal offence are clear; (ii) the evidence is true and sufficient; (iii) the crime alleged is correct; (iv) there is any missing criminal offence or suspect; (v) there is any civil proceeding attached to the criminal litigation; and (vi) the investigative activities are carried out in accordance with the PRC Criminal Procedure Law.

The PRC Criminal Law and relevant judicial interpretations issued by the Supreme Court provide detailed guidelines on sentencing and the aggravating and mitigating factors for each criminal offence based on the facts, nature, circumstance and extent of harm of the crime. Furthermore, the procuratorate may also consider the effectiveness of a company’s compliance programme when deciding whether to pursue prosecution. The courts and enforcement bodies thus play a critical role in the prosecution of white-collar offences, guided by a combination of statutory requirements, judicial discretion, and the specific facts of each case.

There is no direct reference to deferred prosecution agreements or non-prosecution agreements under the PRC Criminal Law or the PRC Criminal Procedure Law.

However, the PRC Criminal Procedure Law does establish a similar mechanism to resolve a criminal investigation without a trial.

Non-prosecution based on a compliance programme has been officially introduced across China since 2022. This means that the prosecuting authorities for unit crime cases can decide not to arrest or prosecute in order to propose a lighter sentence under the plea system of leniency by requiring enterprises suspected of specific crimes to make compliance commitments and actively rectify in order to promote compliance and law-abiding business. The application of the non-prosecution based on compliance programme includes both unit crime cases and individual crime cases related to the production and operation of enterprises.

For an enterprise-related criminal case that meets all of the following conditions, the procuratorate may apply the Guiding Opinions on Establishment of a Third-Party Supervision and Evaluation Mechanism for the Compliance of Enterprises Involved in Cases (for Trial Implementation) (the “Guiding Opinion”):

• The enterprise or individual involved in the case pleads guilty and accepts punishment
• The enterprise involved in the case can carry out normal production and operation, makes a commitment to establish or improve the corporate compliance system, and meets the basic conditions to launch a third-party supervision and evaluation mechanism (the “Third-party Mechanism”).
• The enterprise involved in the case voluntarily applies the Third-Party Mechanism.

According to the Guiding Opinion, the Third-Party Mechanism refers to an organisation appointed by the Administration of Third-Party Supervision and Assessment Mechanism. This organisation investigates, evaluates, supervises, and inspects a corporate unit’s compliance when the procuratorate handles relevant criminal cases. The investigation results will be an important reference for legal proceedings by the procuratorate.

The majority of cases where no prosecution occurred due to corporate compliance involved companies that had completed their compliance and rectification plans under third-party supervision. After a public hearing, the prosecutor agreed to handle these cases leniently. Most individuals not prosecuted had mitigating factors such as voluntary surrender, guilty pleas, or acceptance of punishment.

The Third-Party Mechanism applies to financial crimes and duty-related offences in company operations. This includes crimes by both the companies themselves and those committed by actual controllers, management personnel, and key technical staff directly responsible for production activities. According to the Guiding Opinion, investigation results are crucial references for the procuratorate’s legal handling of these cases.

Non-prosecution is not restricted to cases with lighter penalties. For instance, in one case, the procuratorate determined that the criminal should face a base sentence of 66 months for fraud, classifying it as a felony. However, after considering factors such as voluntary surrender, restitution, first-time offence status, and a guilty plea, the case was directed to compliance inspection and ultimately resulted in non-prosecution under the compliance programme.

There are over 50 criminal offences related to unit crimes under the PRC Criminal Law. Recent enforcement actions by authorities have targeted unit crimes such as bribery, corruption, tax evasion, illegal fundraising, market manipulation, money laundering, leaking state secrets, commercial espionage, personal information breaches, and computer system intrusions.

As mentioned in 1.5 Corporate Liability and Personal Liability, a legal entity can be held criminally liable if it commits a “unit crime”. Under the unit crime doctrine, the person directly responsible, other responsible persons (eg, legal representatives, managers, etc) and the company can be held criminally liable. However, if a legal entity established by individual(s) for the purpose of carrying out unlawful and criminal activities commits a crime, or if a legal entity is established with the primary activity of committing crimes, it shall not be recognised as a unit crime.

The unit crime is committed when the following three elements are met: (i) the decision is made collectively; (ii) the criminal offence is committed in the name of the company; and (iii) the criminal offence is committed for the benefit of the company.

There are various criminal offences under the PRC Criminal Law that can be attributed to a company. In addition to the three elements mentioned above, the defendant must also satisfy the specific criteria for different crimes. For instance, in cases of an entity offering bribes to public officials, the following elements apply:

• motive: seeking improper interests;
• subject: the bribe offeror must be an entity;
• object: maintaining integrity and incorruptibility among public officials; and
• objective aspect: the recipient must be a public official, with bribes potentially offered as kickbacks or commissions.

Under PRC laws, sanctions for unit crime are divided into two types: the dual penalty system and the single penalty system. The dual penalty system imposes criminal penalties on both the entity and its directly responsible individuals, while the single penalty system penalises either the entity or those individuals in charge. According to the PRC Criminal Law, sanctions for unit crime typically involve fines on the entity and criminal penalties on directly responsible individuals in charge. The dual penalty system is generally applied, with the single penalty system as an exception based on specific legal provisions. If a case qualifies as a unit crime, both the unit and its directly responsible individuals will face criminal liability. In some cases, individual sentences may be significantly reduced, and employees may serve as witnesses without facing criminal charges themselves.

Under the PRC Criminal Law, the main bribery-related crimes are as follows:

• The acceptance of bribes by public official(s): The maximum sentence is life imprisonment or the death penalty, plus forfeiture.
• Offering bribes to public official(s): The maximum sentence is life imprisonment plus a fine or forfeiture.
• The acceptance of bribes by non-public official(s): The maximum sentence is life imprisonment plus a fine.
• Offering bribes to non-public official(s): The maximum sentence is imprisonment for ten years plus a fine.
• The acceptance of bribes using influence: The maximum sentence is imprisonment for seven years plus a fine or forfeiture.
• Offering bribes to personnel with influence: The maximum sentence is imprisonment for ten years plus a fine.
• Offering bribes to an entity: The maximum sentence is imprisonment for three years plus a fine.
• Offering bribes to public official(s) by an entity: The maximum sentence is imprisonment for five years plus a fine.
• Bribery peddling: The maximum sentence is imprisonment for three years plus a fine.
• Offering bribes to foreign public official(s) or official(s) from international organisation(s): The maximum sentence is imprisonment for ten years plus a fine.

The constituent elements of the crime of the receipt of bribes by public official(s) are as follows:

• Object (the interests injured): In this case, the object is the integrity and incorruptible nature of the duty of public officials.
• Objective aspect (actus reus/guilty act): The defendant has taken advantage of their capacity as a public official to solicit or accept property from others, including kickbacks or commission fees, etc.
• Subject (who commits the crime): The defendant must act in the capacity of a public official.
• Subjective aspect (mens rea/guilty mind): The defendant must intend to seek interests for the bribe offeror.

The constituent elements of the crime of offering bribes to public official(s) are as follows:

• Object (the damaged interests): In this case, the object is the integrity and incorruptible nature of the duty of public officials.
• Objective aspect (actus reus/guilty act): The defendant has offered property to a public official(s).
• Subject (who commits the crime): Any individual can be the subject of such a crime.
• Subjective aspects (mens rea/guilty mind): The defendant must intend to seek improper interests.

Among the constituent elements for accepting or offering bribes, the “property” refers to money, material objects and property interests. Property interests include material interests that could be converted to money – eg, house renovation, acquittance of debts, and any other payable interests, including membership service and travel, etc.

The definition of “public officials” covers a broad range, and therefore has been a frequently used defence in bribery cases. For decades, the laws and judicial interpretations have been amended from time to time on this point. In particular, the Regulation on Implementation of the PRC Oversight Law implemented in September 2021 defines “public officials” as follows:

• government officials;
• management personnel of state-owned enterprises;
• personnel who perform organisational, leadership, management or supervisory duties in education, scientific research, cultural, healthcare or sports institutions that are invested in by government authorities or other organisations using state-owned assets for the purpose of social welfare;
• the preliminary level of people’s autonomous organisations (eg, the sub-district offices); and
• other relevant personnel who perform public duties (eg, representatives of the People’s Congress, representatives of the People’s Political Consultative Congress, etc).

In addition to the criminal offence of the receipt by and offering of bribes to PRC public officials, it is also a criminal offence to offer bribes to “foreign public officials” who work on behalf of foreign governments or international organisations.

In addition to bribery involving public officials, private entities can also be criminalised under PRC Criminal Law. Offering kickbacks or off-the-books commissions in economic transactions between private entities is a criminal offence. The PRC Anti-Unfair Competition Law defines commercial bribery as offering bribes to entities that (i) are entrusted by the counterparty with relevant affairs or (ii) have influence over transactions. Private entities may pay legitimate discounts or commissions if they are accurately recorded in accounting books; otherwise, such payments could lead to commercial bribery risks. The Administrations of Market Regulation can impose administrative liabilities on those committing commercial bribery.

Moreover, during administrative investigations, if violations of criminal laws are found, the case must be referred to the public security bureau for further investigation.

Bribing foreign public officials or officials from international organisations was added to the PRC Criminal Law in 2011 after China signed the United Nations Convention Against Corruption but remains a marginal offence. Despite being established for over thirteen years, there have been few judicial cases.

Compared to other bribery offences, offering bribes to foreign public officials has two main features: (i) the recipient is a foreign public official; and (ii) the intent is to gain improper “commercial” benefits.

However, the PRC Criminal Law has yet to provide clear definitions for the specific scope of “foreign public officials” and what constitutes “improper commercial interest”. For instance, there is ongoing debate as to whether individuals employed by foreign state-owned enterprises, non-governmental organisations directly under government control, and political party personnel should be considered foreign public officials under the law. Additionally, there is uncertainty about whether benefits received during routine business activities – such as paying to avoid penalties imposed by a foreign government, rather than to obtain a specific trading advantage – fall within the definition of improper commercial interest.

In general, an ordinary employee without a fiduciary duty to their company is not specifically obligated to prevent bribery, even with knowledge of it, provided they have not conspired in or participated in the bribery.

However, if the employee (i) owes a fiduciary duty to the company, or (ii) conspires in or participates in the bribery, then when the company commits the unit crime of bribery, the employee has the obligation to prevent it. Failure to do so in these circumstances could lead the court to presume that the employee is a conspirator, accomplice or accessory to the unit crime of bribery.

In China, state-owned enterprises are strictly regulated. The State-Owned Assets Supervision Commission mandates that these enterprises maintain a compliance programme. According to the Central State-Owned Enterprise Compliance Management Guidance (Trial), management must develop a compliance programme. Failure to do so, especially if it leads to criminal activities, can result in liability for both the company and responsible personnel.

Furthermore, under the mechanism of non-prosecution based on a compliance programme, if a company chooses to implement a robust compliance programme, the procuratorate may, at its discretion, decide not to arrest or prosecute, change the mandatory measures, or propose leniency, depending on the effectiveness of the compliance programme. An effective and robust compliance programme usually includes, but is not limited to:

• effective identification and control of compliance risks;
• promptly dealing with irregularities and violations;
• reasonable allocation of compliance department and personnel;
• development of compliance policy and sufficient human resource and financial support;
• normal operation of detection, whistle-blowing, investigation and handling mechanisms; and
• continuous remedial actions and compliance culture.

According to the PRC Criminal Law, the main offences related to insider trading and criminal banking law are outlined below.

• The crime of insider trading: The defendant, who has knowledge of inside information, purchases or sells securities or futures during the course of issuance or trading of securities, or before the disclosure of information that could have material impact on the price of securities or futures; or the defendant who has knowledge of inside information leaks such information and explicitly or implicitly requests others to purchase or sell the underlying securities or futures. The corresponding sentence could range from detention to imprisonment for a maximum of ten years plus a fine.
• The crime of financial solicitation: The defendant solicits funds from the public in violation of the financial laws and regulation. The corresponding sentence could range from detention to imprisonment of more than ten years plus a fine. The constituent elements of this crime are as follows:
1. The defendant fails to obtain authorisation from relevant government authorities, or solicits funds in the name of legitimate business operation.
2. The defendant publicly promotes or solicits through the internet, media, sales meetings, product catalogues or mobile phone text messages.
3. The defendant promises to repay or reward the principal and interests in the form of money, material objects or equity within the stipulated time frame.
4. The defendant solicits funds from unidentified personnel of the public.
• The crime of illegal business operations: The defendant illegally operates the business of securities, futures or insurance, or illegally engages in fund payment and settlement business, without approval of competent authorities. The corresponding sentence could range from detention to imprisonment of more than five years plus a fine.

According to the PRC Criminal Law, there are several specific offences related to tax fraud – eg, tax evasion, fraudulent claim of export tax refund, and false issuance of special invoices for VAT, etc.

Among these tax-related crimes, the most pervasive crime is tax evasion. If a taxpayer files fraudulent tax returns or fails to file tax returns through deception or concealment from the tax authorities, resulting in an underpayment of more than 10% of the tax due, it constitutes a crime of tax evasion. If the withholding agent fails to pay or underpays the withheld taxes, it may also constitute a crime of tax evasion.

On 18 March 2024, the Supreme Court and the Supreme Procuratorate issued the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Endangering Tax Collection and Management, which includes the signing of duplicate contracts, false declaration of special additional deductions and fraudulent tax incentives as means of tax evasion.

There is no mandatory obligation for an ordinary employee to prevent tax evasion simply because they are aware of it, nor is it a criminal offence for them to fail to do so. However, company personnel in charge (eg, the legal representative) and those directly responsible for approving or preparing tax returns (eg, CFO or finance manager) have an obligation to prevent tax evasion. This is crucial as tax evasion can be considered a unit crime, making both the company and responsible personnel liable. If these individuals fail to prevent tax evasion while the company continues such activities, they will face criminal liability alongside the company.

According to the PRC Criminal Law, there are two criminal offences related to record-keeping:

• the crime of concealing or intentional destruction of accounting vouchers, accounting books and financial statements; and
• the crime of disclosure or non-disclosure of material information in violation of relevant laws and regulations.

For the crime of concealing or intentional destruction of accounting vouchers, accounting books and financial statements, the competent authorities shall establish the defendant’s obligation to keep accurate financial records and the defendant’s failure to meet such obligation. For the crime of disclosure or non-disclosure of material information in violation of relevant laws and regulations, the competent authority shall establish that (i) the defendant has the obligation to disclose such material information to the shareholders or the public; (ii) the defendant either discloses fraudulent financial statements that conceal material information or fails to disclose material information in accordance with legal requirements; and (iii) the defendant has caused material damage to the interests of the shareholders or other personnel.

For the crime of concealing or intentional destruction of accounting vouchers, accounting books and financial statements, the corresponding sentence ranges from detention to imprisonment for a maximum of five years plus a fine. For the crime of disclosure or non-disclosure of material information in violation of relevant laws and regulations, the corresponding sentence could range from detention to imprisonment for a maximum of ten years plus a fine.

The crime of disclosing or failing to disclose material information in violation of laws and regulations refers to the legal obligation of listed companies to provide shareholders and the public with accurate financial reports. Elements of this crime include providing false accounting reports, concealing important facts, or failing to disclose other legally required information, which can seriously harm shareholder interests or involve other serious circumstances. The PRC Securities Law outlines three main violations related to disclosure: false records, misleading statements, and material omissions.

According to the China Securities Regulatory Commission (CSRC), over the past three years, it addressed 397 violations of information disclosure by listed companies, with a significant increase in cases transferred for criminal prosecution.

According to the PRC Criminal Law, the criminal offence related to cartels is “conspiracy for bidding”, where the defendant colludes to manipulate bid prices in a tender process, harming the interests of other tenderers or bidders. The corresponding sentence could range from detention to imprisonment for a maximum of three years plus a fine.

Furthermore, according to the PRC Anti-Monopoly Law, “monopolistic conduct” includes: (i) the conclusion of a monopoly agreement between business operators; (ii) the abuse of a dominant market position by a business operator; and (iii) a concentration of undertakings which has or may have the effect of excluding or limiting market competition.

Business operators are prohibited from entering into horizontal monopoly agreements for price fixing or changing prices of commodities. The corresponding administrative liabilities include: (i) termination of the monopoly agreement; (ii) forfeiture; and (iii) a fine imposed in the amount of 1%-10% of the previous year’s sales revenue, or CNY5 million if there is no sales revenue in the previous year. If a monopoly agreement has been signed but not implemented, the competent authority can impose a maximum fine of CNY3 million. Additionally, the legal representative, principal responsible individuals, and directly responsible personnel may face a fine of up to CNY1 million.

If a business operator abuses its dominant market position, the corresponding administrative liabilities include: (i) an order to cease its illegal activities; (ii) confiscation of its illegal earnings; and (iii) a fine in the amount of 1%-10% of its sales revenues of the previous year.

Where any business operator carries out a concentration of undertakings that violates the PRC Anti-Monopoly Law, the corresponding administrative liabilities include: (i) an order to cease the concentration, dispose of the shares or assets, or transfer the undertaking within a certain timeframe, or to take other necessary measures to restore its status to the pre-concentration state; (ii) a fine in the amount of 1%-10% of the previous year’s sales revenue; and (iii) a maximum fine of CNY5 million if the concentration does not have the effect of excluding or limiting competition.

According to the PRC Criminal Law, it is a criminal offence to manufacture or sell products that are mixed with impure ingredients or fake, defective or disqualified products. The corresponding sentence could range from detention to life imprisonment plus a fine or forfeiture. Due to the very strict product quality and food safety laws in China, the production or sale of products or food products with a value of more than CNY50,000 shall be held criminally liable.

Furthermore, under the PRC Food Safety Law, if food does not meet safety standards, consumers can seek compensation for damages and demand up to ten times the purchase price. Those who falsify food labels to fraudulently claim compensation – known as “malicious professional extortionists” in China – may face extortion charges and penalties ranging from a maximum of three years to over ten years of imprisonment plus fines.

According to the PRC Consumer Rights Protection Law, if a business operator commits fraud in providing commodities or services, consumers could demand compensation of three times the price of the services or commodities. In addition to civil liability, the competent authority could (i) order the business operator to rectify, (ii) issue warnings, (iii) order a forfeiture, (iv) impose a fine of one to ten times the illicit gain, (v) impose a fine of no more than CNY500,000 if there is no illicit gain, and (vi) order to suspend the business for rectification or revoke the business licence.

According to the PRC Criminal Law, criminal offences related to cybercrimes and computer fraud and their respective constituent elements are as follows:

• Hacking into computing systems: The offences involves hacking into computer systems critical to government affairs, national security, or cutting-edge scientific technology. The corresponding punishment ranges from detention to imprisonment for a maximum of three years.
• Illegal acquisition of data from computer systems or illegally taking control of computer systems: The offence involves hacking into computer systems that are not related to government affairs, national security, or cutting-edge scientific technology, obtaining data stored, processed or transmitted from the computer systems through technical means, and illegally taking control of the computer systems. The corresponding punishment ranges from detention to imprisonment for a maximum of seven years plus a fine.
• Providing programs and tools for hacking into, or illegally taking control of, computer systems: The offence involves providing specialised programs and tools to hack into or illegally take control of computer systems, or providing other personnel with programs and tools in the knowledge that they will use them to hack into, or illegally take control of, the computer systems. The corresponding punishment ranges from detention to imprisonment for a maximum of seven years plus a fine.

In the context of China’s legal framework, the act of infringing upon trade secrets through illicit means such as theft, bribery, fraud, coercion, hacking, or other improper methods constitutes the crime of infringement of trade secrets. The perpetrator may face criminal penalties ranging from detention to fixed-term imprisonment of over ten years and a fine. The competent authorities actively investigate and prosecute trade secret infringement cases, with the specific criteria and penalties varying depending on the circumstances of each case.

According to the PRC Criminal Law, the five main types of financial crimes are: (i) illegal absorption of public deposits; (ii) fraud; (iii) illegal issuance of loans; (iv) embezzlement; and (v) misappropriation of corporate funds.

There are two main categories of criminal offences related to trade or customs sanctions: (i) illegal business operation and (ii) smuggling (including indirect smuggling).

According to the PRC Criminal Law, a defendant who engages in any of the following acts commits the crime of illegal business operations:

• selling special products that are prohibited or restricted for sale without an appropriate permit;
• selling import and export licences, certificates of origin, business licenses or other approvals as required by relevant laws and regulation;
• engaging in the business of securities, futures, and insurance without approval from the competent governing authority, or engaging in illegal cash settlement operations; or
• any other form of illegal business that disturbs the market economic order.

The PRC Criminal Law recognises different types of smuggling crimes based on the objects involved, such as smuggling:

• weapons and ammunition;
• nuclear materials;
• counterfeit currencies;
• cultural relics;
• noble metals;
• rare animals and rare animal products;
• goods or articles whose import and export are prohibited by the state; or
• ordinary goods and articles.

According to the PRC Criminal Law, someone commits the crime of indirect smuggling if they:

• directly purchase from a smuggler products prohibited for import or other smuggled goods or products in relatively large quantities;
• transport, purchase or sell products prohibited for import or export within continental seas, territorial waters, boundary rivers or boundary lakes; or
• transport, purchase or sell goods and products that are restricted for import or export in relatively large quantities, without a legitimate licence.

With respect to trade sanctions, China has refined its import and export licensing system for dual-use items and technologies under the PRC Export Control Law. In 2023, it amended the Regulations on Administration of Commercial Codes to tighten controls related to national security and international obligations. Additionally, China has improved counter-sanctions mechanisms, including updating its List of Unreliable Entities.

According to the PRC Criminal Law, it is a criminal offence if a defendant, with knowledge of illicit gains and proceeds, knowingly conceals, transfers, acquires, sells, disguises or conceals such illicit gains and proceeds in any other form. To establish the criminal offence of concealment, the competent authority must prove that:

• the defendant has knowledge of the illicit nature of the gains and proceeds;
• the gains and proceeds are indeed illicit; and
• the defendant carries out acts of concealing, transferring, acquiring, selling or disguising these gains and proceeds.

The predicate offence of concealment includes but is not limited to corruption and bribery-related crimes, tax evasion, money laundering, financial frauds, terrorist activities, etc.

The crime of concealing proceeds of crime must be premised on the establishment of facts of the predicate offence. This requires:

• The facts of the predicate offence must be established, which involves: (i) proving the facts of the predicate offence with sufficient evidence, and (ii) demonstrating that the facts of the predicate offence reach the threshold of criminality.
• The determination of concealing proceeds of crime shall be carried out after the determination of the predicate offence.

The term “proceeds” is not limited to monetary benefits but also includes illegally obtained data or personal information.

Generally speaking, a person could not be held liable for both the predicate offence and concealment, because the lesser offence (ie, the crime of concealment) is merged into the more serious offence (eg, the crime of bribery, tax evasion, money laundering, etc).

A defendant who conspires with or aids and abets others to commit a corporate offence could also be held liable.

For conspiracy, each conspirator shall be charged with the crimes they conspired to commit. For aiding and abetting, the accomplice’s sentence could be mitigated or reduced or they could be exempted from criminal liability.

In accordance with the PRC Criminal Law, the conviction for joint crimes requires participants to have the mental state of complicity in the crime. Should an individual objectively assist in criminal activities but lack the subjective intent to participate in the crime, it does not constitute a joint crime. Depending on the circumstances, this may amount to a crime of negligence or result in no criminal liability.

According to the PRC Criminal Law, it is a criminal offence to conduct money laundering. The constituent elements of money laundering include concealing and disguising illicit gain and the relevant proceeds of crimes through the following means:

• offering bank accounts;
• converting the property into cash, financial instruments or securities;
• transferring funds via wire transfer or other payment settlement methods;
• transferring assets across borders; or
• any other means.

The predicate offences of money laundering include drug crimes, crimes related to underworld organisations, terrorist activities, smuggling, corruption and bribery, destruction of financial management order, and financial fraud. The corresponding sentence could range from detention to imprisonment for a maximum of ten years plus a fine.

In accordance with the Interpretation on Several Issues Concerning the Application of Law in Handling of Money Laundering Criminal Cases issued by the Supreme Court and the Supreme Procuratorate (the “Interpretation”), effective as of 20 August 2024, the determination of “knowing or should have known that the transferred or concealed property is illegally obtained” must be based on a comprehensive review and judgment. This includes:

• the information accessed or received by the defendant;
• the circumstances of how others handled the proceeds of crimes and their profits;
• the type and amount of the criminal proceeds and their profits;
• the methods of transfer and conversion of the proceeds and their profits, unusual transactions, capital accounts, and other abnormal situations;

• the defendant’s professional experience and relationships with perpetrators of predicate offences;
• the defendant’s statements and defences; and
• accusations of co-defendants and witness testimonies.

Evidence proving the defendant’s ignorance is excluded from this consideration.

Furthermore, according to the Interpretation, transferring or converting the proceeds of crime and the profits through virtual asset transactions or financial asset exchanges also constitutes “concealing or disguising the source and nature of the proceeds of crime and their profits by other means”. Therefore, money laundering through virtual currencies such as Bitcoin is also considered a criminal offence under the PRC Criminal law.

According to the PRC Anti-Money Laundering Law, financial institutions and certain non-financial institutions in the PRC must implement measures to prevent and monitor money laundering, including:

• a KYC policy;
• record-keeping of client identity and transactions; and
• reporting large or suspicious transactions.

If a financial institution fails to meet these obligations, engages with clients of unknown identity, opens anonymous or fake accounts, leaks confidential information, obstructs anti-money laundering inspections, or provides false investigation materials leading to money laundering activities, it may face administrative penalties ranging from CNY500,000 to CNY5 million. Directors and senior management could be fined between CNY50,000 and CNY500,000. The competent authority may also recommend: (i) revoking qualifications or banning relevant personnel; (ii) ordering cessation of business operations with remedial actions; and (iii) revoking the institution’s licence.

The competent enforcement authorities mainly include, but are not limited to, the People’s Bank of China, the Public Security Bureau, the National Oversight Commission, the Supreme Court, the Supreme Procuratorate, and the National Administration of Finance Supervision.

Depending on the circumstances, the main common defences for white-collar offences include:

• lack of legal duty;
• lack of capacity as a public official;
• error or ignorance of facts when the law specifically requires knowledge;
• lack of malice and intent;
• acting under duress or coercion, which is a mitigating factor; and
• the criminal offence is trivial or amounts to a harmless error.

As discussed in 2.4 Internal Investigations, the Measures for Establishing, Evaluating and Examining Compliance Programmes of Enterprises (Trial) highlight that a company’s robust compliance programme and effective internal investigations are crucial factors in assessing its compliance. Based on this assessment, the procuratorate may decide not to arrest or prosecute, modify mandatory measures, or recommend leniency.

A decision not to prosecute, based on the compliance programme, may apply to most unit crimes, where both the entity and relevant individuals are criminally liable. The unit crimes could include all the relevant crimes listed in 3.1 Criminal Company Law and Corporate Fraud, such as bribery and corruption, tax-related crimes, money laundering, cybersecurity and computer-related crimes, and financial fraud.

There are exceptions or de minimis exceptions for white-collar offences in China. If the amount of the bribe is below the threshold for filing a criminal case, the defendant could be exempted from criminal liabilities. For example, the thresholds for corruption and bribery-related crimes are as follows:

• the acceptance of bribes by public official(s) – usually CNY30,000, and CNY10,000 under specific circumstances;
• the acceptance of bribes by an entity – CNY100,000;
• offering bribes to public official(s) – usually CNY30,000, and CNY10,000 under specific circumstances;
• offering bribes to an entity – CNY100,000 for individual bribe offerors, and CNY200,000 for entity bribe offerors;
• bribery peddling – CNY20,000 for bribery peddling by individuals, and CNY200,000 for bribery peddling by an entity;
• the offering of bribes by an entity – CNY200,000;
• the acceptance of bribes by a non-public official – usually CNY60,000 and CNY20,000 under specific circumstances prior to May 2022; CNY30,000 after May 2022;
• offering bribes to a non-public official – CNY60,000, and CNY20,000 under specific circumstances prior to May 2022; CNY30,000 for a bribe by an individual bribe offeror, and CNY200,000 for a bribe by an entity bribe offeror after May 2022; and
• offering bribes to a foreign public official or officials of an international organisation – CNY30,000 for individual bribe offerors, and CNY200,000 for entity bribe offerors.

However, since the law is ever-evolving, the above de minimis thresholds are subject to revisions from time to time.

There are no exempt industries or sectors. The PRC Criminal Law is applied equally to all industries and sectors in China. In fact, large state-owned enterprises with dominant market positions have been highly regulated and closely monitored for anti-corruption purposes in recent years. There have been vigorous enforcement actions towards state-owned enterprises in critical industries such as finance, energy and real property.

Under the Chinese criminal law system, there are (i) plea bargain mechanisms and (ii) the “criminal settlement agreement” mechanism, which is a mechanism similar to a deferred prosecution agreement or non-prosecution agreement. Self-disclosure and co-operating with investigators or prosecuting authorities are mitigating factors when criminal liability is assessed. In practice, lawyers often procure the defendant and the victim to reach a criminal settlement agreement, so that the defendant can plead guilty in exchange for a reduced sentence. This is a win-win situation, where the victim receives compensation for losses, and the defendant receives a reduced sentence. Generally speaking, the timing for self-disclosure is before the judicial authority locates the defendant, or before detention or interrogation, if the defendant is located.

According to the Sentencing Guidance for Commonly Seen Crimes (Trial), if a defendant voluntarily self-discloses and co-operates with the investigators or prosecutors, the criminal liability can be reduced by a maximum of 40% of the base sentence, taking into consideration the motive, timing, method, severity of the offence, and the extent of self-disclosure and confession.

As discussed in 2.4 Internal Investigations, a robust compliance programme can also serve as a mitigating factor for leniency. Under the Measures for Establishing, Evaluating and Examining Compliance Programmes of Enterprises (Trial), a company’s implementation of an effective compliance programme is a significant factor in evaluating its overall effectiveness. Depending on the programme’s effectiveness, the procuratorate has the discretion to decide whether to refrain from arrest or prosecution, alter compulsory measures, or propose leniency.

The Chinese government encourages and protects whistle-blowers to ensure oversight of officials and state-owned enterprises. Various authorities, including the Supreme Procuratorate, Ministry of Public Security, and others, have established hotlines and policies to support whistle-blowers with protection and rewards. For instance, under provisions from the Supreme Procuratorate, Ministry of Public Security, and Ministry of Finance regarding whistle-blowing on public officials’ crimes, rewards can reach up to CNY500,000 or more, subjec to approval. The procuratorate and public security bureau are responsible for protecting whistle-blowers and their families against retaliation.

According to the Interim Provision for Rewarding Whistle-blowers of Severe Violations of Market Regulations, competent administrative authorities will reward the whistle-blowers of violations against market regulation with a maximum of CNY1 million. The Administration of Market Regulation protects the whistle-blower’s legitimate interests and maintains strict confidentiality regarding the whistle-blower’s identity.