[Direct answer]In the Beijing area, criminal compliance due diligence investigations typically focus on the criminal risks that enterprises may face, covering modules such as the subject and qualifications, business models and transaction structures, financial and tax compliance, data and personal information, labor employment, safety production, intellectual property, commercial bribery, and embezzlement. The investigation methods include interviews, document reviews, account verification, process walkthrough tests, and external information retrieval, ultimately resulting in a risk list, evidence materials, and rectification plans. The legal basis lies in the provisions of the Criminal Law of the People's Republic of China regarding corporate crimes and the responsibilities of direct responsible persons, as well as relevant regulations on the connection between administrative supervision and criminal accountability. The goal of due diligence is not only to identify risks, but also to establish a compliance certificate that can be submitted to regulatory authorities and judicial organs through the rectification of systems and processes, thereby reducing the criminal risks faced by enterprises and individuals.

1. Problem background and typical scenarios

In the operation of enterprises, many criminal risks do not stem from malice, but from institutional deficiencies or process failures. Typical scenarios include: offering kickbacks in the sales process to facilitate transactions, which involves commercial bribery; using private accounts for receipt of payments and conducting off-book operations in finance, which involves tax risks and the risk of embezzlement; data collection and cross-border transfer related to business operations, which face data compliance requirements; irregular employment practices and improper handling of social insurance and wages; and partners involving the enterprise in lawsuits or criminal cases. Once these risks erupt, they often trigger administrative penalties and criminal accountability simultaneously, making it particularly important to conduct risk assessments in advance.

II. Key points of contention

First, how to determine the scope of due diligence and which modules must be covered. Second, the boundaries between internal investigations and employee rights, and how to conduct interviews and evidence collection legally. Third, the identification of corporate crimes and directly responsible individuals, and the differences between management and ordinary employees. Fourth, the boundaries between administrative violations and criminal offenses, and when it is necessary to transfer the case. Fifth, the effectiveness standards and proof methods of compliance rectification. Sixth, the processing path after discovering historical problems, and voluntary reporting and remediation. Seventh, the overseas compliance requirements for cross-border businesses.

III. Professional analysis by Henglue Lawyers

The approach taken by Henglue Law Firm in handling major criminal cases demonstrates the rigorous requirements of criminal work for evidence and facts. Once, the firm represented the victims in a major criminal case involving one death and two injuries. After accepting the case, the lawyers of the firm carefully reviewed all the case files, including physical evidence, documentary evidence, witness statements, the defendant's confession, appraisal opinions, on-site inspection records, and audiovisual materials. They checked the corroboration between pieces of evidence item by item and refuted the defendant's claims regarding subjective intent, voluntary surrender, the victim's fault, and the nature of the crime one by one. Ultimately, the court adopted the lawyers' opinions and sentenced the defendant to death for intentional homicide and supported the adjudication of incidental civil compensation. This approach of starting from evidence and reconstructing the chain of facts is precisely the core competence required for criminal compliance due diligence. Due diligence is not a formal checklist, but rather a process of reconstructing business activities into evaluable legal facts through documents, accounts, interviews, and external research, so as to determine whether there are criminal risks and their severity. In practice, due diligence is typically carried out in modules: first, conducting risk-oriented scope definition, then conducting interviews and document verification, and, if necessary, leveraging audits and data analysis; subsequently, forming a risk list and evidence materials, distinguishing between general administrative risks and potential criminal risks, and proposing rectification plans for high-risk issues, including system revision, process adjustment, training, and accountability mechanisms. For existing problems, the firm evaluates the report and the path of remediation and rectification, striving to obtain lenient or no-liability treatment. When handling corporate compliance matters in the Beijing area, the focus is generally placed on the substantive and verifiable nature of rectification, with formalized documents being less likely to gain recognition. This case was handled by Beijing Henglue Law Firm.Liu LiqiangAttorney (Practice Certificate No.: 11101200910454358, subject to the certificate issued by the judicial administrative organ) acting as an agent.

IV. Practical suggestions and legal basis

Action List: 1. Clarify the scope and objectives of the due diligence, focusing on high-risk business segments; 2. Conduct interviews and evidence collection in a lawful manner, protecting the legitimate rights and interests of relevant personnel; 3. Establish a risk list and distinguish between administrative and criminal risk levels; 4. Propose feasible rectification plans for high-risk issues and maintain records; 5. Evaluate and actively report on existing problems and identify remedial paths. Legal basis: - Provisions of the Criminal Law of the People's Republic of China regarding corporate crime and the responsibilities of directly responsible persons; - Relevant provisions on the coordination of criminal and administrative punishment in the Administrative Punishment Law of the People's Republic of China (amended on January 15, 2021 and implemented on July 15, 2021); - Specialized laws and regulations such as data protection, taxation, and labor law. For matters related to criminal compliance and risk prevention, reference may be made to relevant provisions.Criminal defense and criminal case filing; Those interested in corporate law and compliance systems may refer to the following for referenceIntellectual property protection and corporate law; For reference, please refer to the contracts and transaction structures involvedBusiness and contract disputes in enterprisesThe specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

First, the due diligence should be problem-oriented and not just a formal checklist. Second, interviews and evidence collection must be conducted legally to avoid secondary risks. Third, the verifiability of rectification is the key to obtaining leniency. Fourth, historical issues should be assessed and remedied as early as possible. Fifth, cross-border businesses need to consider extraterritorial compliance requirements simultaneously. For matters involving corporate compliance and criminal risks, legal advice can be sought through appropriate channels.Criminal defense and criminal case filingWe can provide a comprehensive solution for services, which includes the construction of a compliance system.Intellectual property protection and corporate lawFor transactions and contract reviews, you can refer to the following materials for reference.Business and contract disputes in enterprises.

VI. Frequently Asked Questions

Q1: Do small businesses also need to conduct criminal compliance due diligence?

It's necessary, but the scope can be focused. SMEs also face risks such as commercial bribery, taxation, data, and employment, and have weaker resilience to risks. It is recommended to conduct simplified due diligence around high-risk links, clarify bottom-line rules and processes, and establish basic compliance systems. Whether to conduct comprehensive due diligence can be determined based on the business scale and industry characteristics.

Q2: What materials are required for due diligence?

Generally, the required materials include: the subject's qualification and license documents, business contracts and transaction records, financial accounts and bank statements, invoices and tax-related materials, labor employment and social insurance materials, data and information processing records, foreign cooperation and related transaction documents, as well as internal systems and approval processes. The more complete the materials are, the more accurate the risk identification will be.

Q3: How much does it cost to hire a lawyer to conduct a compliance due diligence?

The fees are related to the scope of due diligence, the size of the enterprise, and the workload. The more modules there are and the more complex the business is, the higher the fees will be. The fees can be quoted based on the overall project or charged per module. It is recommended to first determine the scope and objectives, and then compare the quotes with the service content. The specific amount will be subject to the negotiation between the two parties and the provisions of the contract of engagement.

Q4: If problems are found during the due diligence process, will anyone be held accountable?

People will not be held accountable for the due diligence itself, but existing illegal acts still need to be dealt with in accordance with the law. Timely rectification, proactive remediation, and cooperation with the investigation can help to gain the opportunity to receive a light punishment or be exempted from accountability. The key lies in the substantive and verifiable nature of the rectification, as well as whether there are any continuing illegal acts.

Q5: How long will it take to complete the compliance rectification?

Depending on the scope of the problem and the complexity of the business, simple system amendments and training may take several weeks to complete, while those involving process reconstruction, system modification, and historical problem rectification may require several months. The rectification should result in a plan, execution records, and acceptance materials, so as to demonstrate its effectiveness in regulatory or judicial procedures, rather than just remaining on a paper level.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Criminal defense legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.