Financial Crime World

White-Collar Crime in China: An Overview

The landscape of white-collar crime in China is complex, with various aspects such as investigations, internal investigations, mutual legal assistance treaties, cross-border cooperation, prosecution, and deferred prosecution. This article provides an in-depth look at these key points.

1. Investigations

In China, different authorities have varying powers to conduct investigations:

  • National Oversight Commission: Can detain suspects for up to six months.
  • Public Security Bureaus: Detention periods are strictly limited by the Criminal Procedure Law.

2. Internal Investigations

Companies may conduct internal investigations when faced with a competent authority’s inquiry to understand facts, assess risks, and cooperate fully with the investigative authority. The completeness and thoroughness of these investigations can impact prosecution and sentencing.

Importance of Internal Investigations

  • Compliance: Companies must ensure that their internal investigations are comprehensive and thorough.
  • Cooperation: Full cooperation with investigative authorities is crucial to avoid prosecution and sentencing.

China has entered into mutual legal assistance treaties with over 60 countries, including major economies like the US, UK, France, Italy, Russia, Spain, New Zealand, Japan, Korea, and Australia. Extradition is a key tool for pursuing overseas fugitives.

  • Extradition: A crucial mechanism for pursuing overseas fugitives.
  • Cooperation: China’s mutual legal assistance treaties facilitate cooperation between countries in combating white-collar crime.

4. Prosecution

The procuratorate is responsible for prosecuting crimes under the PRC Criminal Procedure Law. Before prosecution, they assess the clarity of facts, sufficiency of evidence, correctness of the crime alleged, and whether there are any civil proceedings attached to the criminal litigation.

Prosecutorial Assessment

  • Clarity of Facts: The procuratorate must ensure that the facts of the case are clear.
  • Sufficiency of Evidence: Sufficient evidence is required for prosecution.
  • Correctness of Crime Alleged: The crime alleged must be correct.
  • Civil Proceedings: Civil proceedings attached to criminal litigation must be considered.

5. Deferred Prosecution

There’s no direct reference to deferred prosecution agreements or non-prosecution agreements in the PRC Criminal Law or the PRC Criminal Procedure Law. However, a similar mechanism exists for resolving investigations without trial based on compliance programs introduced across China since 2022.

Compliance Programs

  • New Mechanism: A new mechanism where prosecuting authorities can decide not to arrest or prosecute enterprises suspected of specific crimes.
  • Compliance Commitments: Enterprises must make compliance commitments and actively rectify their operations to promote law-abiding business practices.