As the Supreme People's Procuratorate deepens its pilot program for criminal compliance reform, the compliance-based non-prosecution system has gradually been implemented in judicial practice. The issuance and enforcement of the "Guiding Opinions" also provide lawyers—acting as members of third-party supervision and evaluation organizations for compliance-based non-prosecution—with clear guidelines to carry out their related work. Together with pre-trial and post-trial compliance practices that have already been established in previous cases, compliance-related services during litigation—including compliance-based non-prosecution—have now formed a relatively complete upstream-to-downstream chain for lawyers handling criminal compliance matters at this stage.

As an emerging legal practice that has only recently taken root in China, criminal compliance is still very much in the exploratory "crossing the river by feeling the stones" phase. Although there are currently few established guidelines to follow—no restrictive or prohibitive rules have been put in place specifically addressing potential challenges—and no lawyers have yet been penalized or convicted for handling compliance-related cases, attorneys must nonetheless remain highly vigilant about the professional risks involved when engaging in criminal compliance work. On one hand, criminal compliance differs significantly from traditional compliance practices; the legal documents and opinions generated in this area are still evolving and require careful refinement over time. Moreover, since this practice is inherently tied to both ongoing and potential criminal cases, lawyers must always exercise caution in determining the appropriate scope of their involvement and the nature of their advice, ensuring they don’t inadvertently expose their clients—or themselves—to criminal liability. On the other hand, criminal compliance, particularly pre-trial and in-process compliance efforts, is directly linked to whether a company involved in a case will ultimately be found guilty or innocent, and whether it will face penalties or go unpunished. In such high-stakes scenarios, companies may view their compliance counsel as their last hope for avoiding conviction or punishment—sometimes even resorting to unconventional, potentially unlawful tactics to undermine the lawyer’s ability to maintain objectivity and impartiality. Given these unique dynamics, lawyers handling criminal compliance matters must pay extra attention to their own professional risks, ensuring that every aspect of their work remains fully compliant with the law and ethical standards.

Since post-litigation compliance work primarily focuses on compliance remediation efforts initiated after entities have already been penalized by judicial authorities, the associated criminal risks are typically minimal. Therefore, this discussion will center instead on the practice risks that may arise during pre-litigation and in-process compliance activities.

One type of pre-litigation compliance service involves companies that are currently not involved in criminal cases—or facing no immediate criminal risks—but are seeking to establish a robust compliance framework for new business initiatives by engaging lawyers. However, when lawyers assist companies in building such compliance systems, they may encounter the following challenge: If, after implementing the lawyer-recommended practices and commencing operations, the company is later deemed to have committed a crime by judicial authorities, will the lawyer be held accountable? To address this issue, it’s crucial to first assess the inherent compliance of the business initiative itself. If the proposed business activity inherently lacks legal soundness—regardless of whether the company or its counsel takes steps to create a formal compliance structure—the resulting "compliance" would remain superficial at best. In reality, the core of the business would still violate the law, making it impossible to achieve true compliance through mere cosmetic measures. Moreover, if lawyers handling these types of criminal compliance matters develop a flawed understanding of whether the business plan aligns with legal standards, they could inadvertently expose themselves—and their clients—to significant criminal risks simply by being actively involved in the process.

For example, a bidding company might attempt to secure a contract or win business opportunities by offering off-the-books kickbacks. To ensure that these off-the-books payments remain compliant, the company hires a lawyer to establish a compliance framework tailored to this specific business practice. However, if the lawyer begins working on this compliance project and successfully designs a system that makes the off-the-books payments appear legitimate—or at least harder to detect—there’s a significant risk that the lawyer could later face criminal liability. Specifically, the lawyer might be accused of allegedly aiding and abetting the crime by providing the means or methods for committing it. Under Article 295 of the Criminal Law: "Anyone who imparts methods for committing a crime shall be sentenced to imprisonment of up to five years, detention, or control; in more serious cases, the sentence may range from five to ten years; and in particularly severe cases, the punishment could extend to life imprisonment or even the death penalty."

Recently, there has been a real-life case in which a lawyer was convicted of the crime of imparting criminal methods. In the Criminal Judgment ([2021] Ji0523 Xingchu No. 54) issued by the People's Court of Huinan County, Jilin Province, a bidding company sought legal advice from a lawyer on how to safely and discreetly pay a bribe to the head of the bidding authority—without leaving any trace. The lawyer provided detailed instructions on exactly how the company could carry out this payment. Ultimately, the scheme was uncovered, and the lawyer was found guilty of imparting criminal methods.

In light of this, when handling the aforementioned pre-litigation compliance matters, lawyers should pay close attention to and thoroughly review the compliance of the business activities the company intends to undertake, ensuring they avoid being implicated simply by participating in inherently non-compliant operations.

In the pre-litigation compliance phase, when a company has already committed a crime but hasn’t yet been detected by public authorities, can lawyers help the company achieve criminal compliance? And does this type of “remediation” carry any legal risks? This issue touches on another category of pre-litigation compliance services: cases where a company is already implicated in criminal activities but has not yet been formally addressed by judicial authorities. In such situations, companies may hire lawyers to initiate criminal compliance efforts. Currently, this type of engagement is widely regarded in practice as one of the riskiest areas of criminal compliance work for attorneys, leading to significant debate over whether lawyers should even take on these cases. However, to date, the author has not encountered any instances where a lawyer was penalized or convicted for participating in such pre-litigation compliance work. Meanwhile, another case the author reviewed—where a lawyer allegedly committed a crime during their professional practice—provides some relevant insights and serves as a useful reference point for understanding the complexities and challenges involved in this area of legal practice.

In the criminal case involving "loan-trap" schemes, in which Lin, a lawyer, was accused by the People's Procuratorate of Chengzhong District, Xining City, Qinghai Province, of being involved with an organized crime group engaged in such activities, Lin had actually been hired by the criminal gang as their legal advisor and even acted as a litigation agent, filing civil lawsuits on behalf of the victims in this case. The procuratorate alleged in its indictment that Lin had extorted money from the victims by initiating court proceedings—claiming he was a key member of the evil criminal syndicate. However, after the first-instance trial, the court ruled that while serving as legal counsel for the company implicated in the case, Lin’s primary actions were limited to representing the firm in pursuing debt recovery through civil litigation and providing legal advice—activities that did not violate the Lawyers Law or other relevant regulations. Furthermore, the court found that Lin was unaware his legal services were being exploited by the criminal group for "loan-trap" schemes. Consequently, the court dismissed the charges against him, concluding that his actions did not constitute a crime.

This case offers the following points of reference for lawyers handling pre-litigation criminal compliance matters:

1. Strictly adhering to laws and professional standards is the most critical factor in mitigating practice-related risks.

The above case highlights that, regardless of the type of legal service provided, lawyers must adhere strictly to relevant laws and professional standards, such as the Lawyers Law and the Guidelines for Lawyers Handling Criminal Cases. This is especially crucial when offering innovative criminal compliance services—only by meticulously following these guidelines can lawyers effectively mitigate potential criminal risks associated with their practice. In the case at hand, if Lawyer Lin had failed to comply with the Lawyers Law and other applicable regulations, he might have been deemed to have illegally provided legal services "knowingly." Conversely, when lawyers rigorously follow legal frameworks and professional norms while delivering pre-litigation compliance services—even in situations where their clients are already suspected of criminal activity—they can significantly reduce their exposure to legal risks.

2. Situations where providing criminal compliance services to companies involved in crimes may be deemed as "complicity"

Lawyers providing compliance legal services to businesses are essentially offering them a form of assistance. However, establishing liability as an aider and abettor requires the perpetrator to have both the intent to assist and the specific intent to help commit the crime. The "intent to assist" refers to the deliberate intention to aid another person in committing a crime—a mental state that involves a dual psychological component. At the cognitive level, this intent not only demands that the perpetrator recognize that the act being assisted is indeed a criminal offense likely to cause harm but also requires awareness that their own actions constitute direct assistance in facilitating the crime, thereby creating favorable conditions for the offender. At the volitional level, the intent to assist entails a dual set of desires: on one hand, the perpetrator must either actively wish or tacitly accept that their assistance will enable the principal offender to carry out the crime; on the other hand, they must also hope or allow—either consciously or passively—that their help ultimately leads to some form of harmful outcome affecting legally protected interests. If the perpetrator lacks this specific intent to assist, even if their actions do play a role in enabling the crime, they cannot be held criminally liable as an aider and abettor. In this context, lawyers offering pre-litigation criminal compliance legal services may encounter the following scenarios:

First, the lawyer did not identify any criminal activity by the company receiving the services throughout the process. Under these circumstances, the lawyer provided compliant legal services in accordance with professional standards, helping the company establish a compliance framework—without ever assisting the company in engaging in criminal conduct.

Second, when lawyers providing compliance legal services discover that a company’s past business practices already appear to involve criminal activity—though the crime has already been completed—they must recognize that their compliance services will primarily address the company’s future operations. In such cases, the author believes the likelihood of triggering professional liability risks for the lawyer is relatively low. However, it remains crucial to assess whether the company’s prior criminal conduct posed serious threats to national security, public safety, or other critical areas. At the same time, if the company explicitly requests the lawyer to provide compliance services specifically aimed at covering up its past criminal activities, the lawyer could face significant professional risks. Under Article 310 of the Criminal Law—“knowingly providing shelter, financial support, or aiding in hiding a criminal, or fabricating false evidence to shield them”—a lawyer who actively conceals or covers up a company’s criminal behavior while delivering compliance services may inadvertently become liable for the crime of harboring or shielding a criminal offender.

Third, if lawyers providing compliance legal services discover that a company’s past business practices already appear to involve criminal activity—and if that criminal behavior is ongoing—continuing to offer compliance services could risk the lawyer being perceived as knowingly assisting in a crime, potentially leading to their classification as an accomplice.

According to the "Guiding Opinions," during the handling of criminal cases involving enterprises, people's procuratorates should treat written compliance assessment reports from third-party organizations, compliance plans submitted by the companies involved, and regular written reports—as crucial references for making lawful decisions on whether to approve or reject arrest, prosecute or decide not to prosecute, and whether to modify coercive measures. Additionally, these materials will serve as important bases for proposing sentencing recommendations or issuing prosecutorial suggestions and opinions.

Accordingly, the written reports and other documents—such as third-party compliance assessments—that lawyers prepare when engaging in compliance services during litigation play a critical role in determining whether the companies involved will face prosecution. Regarding the issuance of these documents, the primary risks lawyers may encounter while participating in compliance work during litigation include:

1. Legal Risks of Commercial Bribery

Lawyers handling compliance matters in ongoing litigation may face the risk of bribery by non-state personnel if they exploit their position—while preparing compliance reports or other relevant materials—to solicit or illegally accept property from companies involved in the case. The aforementioned "Guiding Opinions" explicitly state that personnel from intermediary organizations must not accept business opportunities with potential conflicts of interest while fulfilling their duties as third-party supervisors and evaluators. Specifically, they are prohibited from leveraging their official roles to demand, receive bribes, or unlawfully appropriate assets belonging to the companies or individuals involved in the case.

2. Legal Risks of Providing False Documentation

The Eleventh Amendment to the Criminal Law has revised Article 229, which deals with the crime of providing false certification documents, by expanding the scope of individuals who can be held criminally liable, adjusting the circumstances that warrant heavier penalties, and increasing the severity of punishments.

The author understands that, in compliance-related litigation, compliance assessment reports issued by intermediary agencies can be regarded as forms of supporting documentation. However, it remains unclear whether such reports fall under the category of "documents" as defined in Article 229 of the Criminal Law. From the perspective of the legislative intent behind the crime of providing false documentary evidence, compliance assessment reports currently may not be covered by this offense. This is because the crime is categorized under "crimes disrupting market order," primarily targeting documents produced by intermediaries during economic activities like securities issuance, asset trading, or engineering projects. In contrast, compliance assessment reports are typically prepared by professionals—such as lawyers, certified public accountants, and tax advisors—in the context of judicial proceedings. Even if these reports turn out to be inaccurate, they do not inherently pose a threat to market order; at most, they could be seen as interfering with the administration of justice.

Whether providing a false compliance assessment report could trigger criminal risks under the "Obstruction of Justice" charge remains unclear and lacks specific legal guidance at present. However, based on Article 305 of the Criminal Law, which addresses the crime of perjury, the author interprets that intermediaries from third-party organizations involved in compliance assessments during litigation can be compared to experts or translators in terms of their role and status within criminal proceedings. If a third-party organization is found to have issued a falsified compliance report, it might be deemed as deliberately providing false testimony, potentially leading to criminal liability for perjury. Notably, perjury is classified as an intentional crime. On the other hand, if the third-party organization inadvertently produces an inaccurate report due to its failure to effectively carry out its oversight and evaluation duties—resulting from negligence rather than intent—it may not be subject to charges of perjury.

Regardless of whether future judicial interpretations will further clarify the criminal liability for inaccurate compliance assessment reports issued by third-party organizations, lawyers handling compliance-related matters during litigation must strictly maintain an objective and neutral stance, diligently fulfilling their supervisory and evaluation duties in accordance with legal practice standards and professional ethics—and thereby effectively mitigating risks associated with their practice.

Conclusion

Private enterprises have become the primary battleground for China's rapidly advancing criminal compliance initiatives. Whether private firms—and especially their entrepreneurs—can effectively mitigate, or even eliminate, their exposure to criminal legal risks will serve as a key benchmark for gauging the success of these criminal compliance efforts. As a vital and professional force in building a socialist rule-of-law system, China's vast community of lawyers should actively and comprehensively engage in this foundational legal transformation. By honing new criminal compliance skills alongside their traditional criminal defense expertise, they can make meaningful contributions to the ongoing development of socialism under the rule of law. Seizing this opportunity presents immense potential—there’s much that can be achieved!

                                                                                Introduction to Star Law Firm

Beijing Xinglai Law Firm was established at the end of 2020, with a mission to "help businesses build robust and compliant systems." The firm specializes in innovative corporate compliance services, complemented by high-end criminal, civil, commercial litigation, and non-litigation legal solutions—providing clients with consistently high-quality, comprehensive problem-solving approaches. Together with Beijing Fayi Technology Co., Ltd., Xinglai has collaborated with seasoned lawyers from its extensive partner network to develop China’s first digital product focused on corporate compliance: the "Xinglai Zhiyin—Corporate Criminal Compliance Index." For inquiries, please contact Xinglai Law Firm at 010-64011566.

Special Advisor at Xinglai Law Firm

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