"Current Status of Criminal Compliance Services for Private Enterprises and Exploration of Lawyer Involvement and Effectiveness"

Report source:

Beijing Lawyers Association Official WeChat Account

Updated every Tuesday and Thursday

On August 11, 2021, the Criminal Compliance Expert Group of the Beijing Lawyers Association Think Tank was officially established. Lawyer Zhao Yunheng from Beijing Xinglai Law Firm serves as the leader of the think tank's Criminal Compliance Expert Group, which brings together compliance experts from the procuratorial system, industry leaders with notable achievements in compliance, practicing lawyers, and legal directors from corporate entities actively engaged in compliance work. Rooted in serving both society and the legal profession, the expert group will proactively demonstrate a strong sense of the bigger picture and social responsibility, thereby driving the advancement and robust growth of criminal compliance practices.

At the meeting to establish the expert panel, the report titled "Current Status of Criminal Compliance Services for Private Enterprises and Exploration of Lawyer Involvement Efficiency" was simultaneously released. The report delves into key issues surrounding criminal compliance from three perspectives: "The Origins and Current State of Criminal Compliance," "Prosecutorial Bodies' Pilot Programs in Criminal Compliance," and "Lawyers' Role in Criminal Compliance Initiatives."

To actively implement the key takeaways of the conference and carry forward its spirit, enabling readers to gain a thorough understanding of criminal compliance, Beijing Xinglai Law Firm will specially share the report "Current Status of Criminal Compliance Services for Private Enterprises and Exploration of Lawyer Involvement Efficiency" in a chapter-by-chapter format every Tuesday and Thursday. We encourage you to stay tuned!

List of Expert Panel Members

Report Summary

Stay clear of the criminal law red line—compliance is the key to ensuring businesses thrive sustainably. Since its introduction to China, criminal compliance has naturally become intertwined with the issue of protecting private enterprises, emerging as a critical and far-reaching topic in the modernization of both national and societal governance. This report examines the underlying factors driving criminal risks faced by Chinese private companies and their entrepreneurs, as well as the most common types of offenses. Building on a clear understanding of related concepts such as compliance, corporate compliance, and corporate criminal compliance, the report highlights the immense value and promising future of fully implementing criminal compliance across the board. Whether viewed as an essential component of refined social governance or as a reflection of how leading U.S. corporations have already embraced criminal compliance, China’s exploration of criminal compliance for private enterprises showcases unique depth, diverse approaches, and vibrant momentum. It has now become a dynamic platform and fertile ground for collaborative innovation within the legal community.

As the "old maternal uncle" who both rigorously oversees and warmly supports private enterprises, China's procuratorial organs are, in fact, the driving force behind the deepening development of criminal compliance systems within the private sector. The Supreme People's Procuratorate has launched two rounds of pilot programs nationwide focused on "Corporate Compliance Supervision/Reform," releasing a series of landmark judicial protection cases involving private enterprises—particularly highlighting successful examples from these pilot initiatives. In June 2021, the Supreme Procuratorate, along with nine other departments including the Ministry of Justice, jointly issued the *Guiding Opinions on Establishing a Third-Party Supervision and Evaluation Mechanism for Corporate Compliance in Cases Involving Enterprises (Trial)*, laying the groundwork for a robust and independent supervisory system. This initiative is actively shaping and expanding practical approaches to corporate compliance remediation and prevention in case-related scenarios.

The legal profession is the backbone of criminal compliance efforts in private enterprises, possessing distinct professional strengths and an irreplaceable role. For lawyers with exceptional criminal defense skills, they can serve not only as proactive compliance advisors for companies or as advocates during legal disputes—but also step into the critical role of an independent third-party compliance monitor. They are uniquely positioned to design robust compliance frameworks, identify specific legal risks, and even guide post-incident litigation and remediation efforts. Of course, lawyers must also remain mindful of the potential, albeit limited, role conflicts that may arise from juggling multiple identities simultaneously.

Lawyers involved in criminal compliance work must strive for specialization. In addition to swiftly adapting their mindset, roles, and team dynamics, they should also undergo targeted training tailored to their specific needs. First, for proactive compliance initiatives, lawyers should master skills such as "written review of corporate risks," "legal risk interviews and identification," "on-site legal risk assessments," "compliance risk evaluations," "drafting compliance reports," and "ensuring the effective implementation of compliance outcomes." Second, in terms of post-event compliance remediation, lawyers need to acquire expertise in handling key areas like initiating, overseeing, and documenting compliance-based non-prosecution cases for businesses. Finally, as lawyers take on their new role as independent compliance supervisors, they must gain practical experience in identifying and assessing corporate criminal risk factors, as well as developing, monitoring, and evaluating comprehensive criminal compliance plans. Only through continuous professional development can lawyers proactively mitigate the potential practice risks associated with compliance work—risks that could even lead to being treated as co-perpetrators in criminal proceedings.

Report Directory

Chapter 1: The Origins and Current State of Criminal Compliance

Section 1: Criminal Legal Risks Faced by Private Enterprises

I. A Macro-Level Understanding of Corporate Criminal Risks

II. Two Drivers That Trigger Corporate Criminal Risks

III. Common Types of Crimes Frequently Seen Among Private Enterprises

Section 2: Clarifying the Concept of Criminal Compliance

I. Clarifying Concepts Such as Compliance, Corporate Compliance, and Corporate Criminal Compliance

II. The Relationship Between Corporate Compliance and Corporate Criminal Compliance

III. The Significance of Criminal Compliance

Section 3: The Rise and Development of Criminal Compliance

I. The Trend Toward Integration of Execution and Administration

II. The Increasingly Sophisticated Governance of Society

III. Insights from the U.S. Corporate Criminal Compliance System

IV. Forms of Corporate Criminal Compliance in Practice in China

V. Collaborative Opportunities for the Legal Professional Community

Chapter 2: Compliance Pilot Program of the Procuratorial Organs

Section 1: Progress of the Two-Round Pilot Program

I. Pilot Unit Work Plan

II. Summary of the Pilot Model

III. Successful Case Studies from the Pilot Program

Section 2: Trends in Criminal Compliance Work Conducted by Prosecutorial Authorities in the Future

I. Institutional exploration becomes more legally grounded

II. Shifting the application of non-prosecution toward small and medium-sized enterprises

III. Limiting the Scope of Application for Compliance-Based Non-Prosecution

4. Enhance the Independent Supervisor System

5. Shift the focus from post-crime compliance efforts following a company’s alleged involvement in criminal activities to proactive, preventive compliance measures implemented beforehand.

6. Exploring Unified Standards for Compliance Acceptance and Evaluation

Chapter 3: An Exploration of Lawyers' Involvement in Criminal Compliance Work

Section 1: The Role and Function of Lawyers

I. Justification for the Necessity of Lawyers' Involvement in Criminal Compliance

II. The Role of Lawyers and Their Corresponding Responsibilities in Criminal Compliance

III. The Role of Lawyers in Each Stage of Criminal Compliance Processes

IV. The Issue of Role Conflicts for Lawyers

Section 2: Professional Skills for Lawyers Engaging in Criminal Compliance Work

I. The Professional Structure of the Criminal Compliance Legal Team

II. The Transformation of Legal Professional Identity

Section 3: Guidance and Recommendations for Lawyers Engaging in Criminal Compliance Work

I. Guideline for Pre-Event Compliance Construction Processes: Launching Compliance Initiatives from a Criminal Perspective

II. Post-Event Compliance Remediation Guide: Implementing Criminal Compliance Non-Prosecution Services

III. Third-party Independent Supervisor: Fulfilling Duties in Lawyers' Emerging Compliance Roles

Section 4: Prevention of Practice Risks for Lawyers

I. Potential Practice Risks Involved in Handling Pre-Litigation Compliance Services for Businesses Not Facing Criminal Charges

II. Potential Practice Risks Involved in Handling Pre-Litigation Compliance Services for Enterprises Facing Criminal Charges

III. Potential Practice Risks Involved in Conducting In-Process Compliance Services as a Third-Party Supervisor