[Direct answer]The establishment of an enterprise criminal risk prevention system focuses on shifting the focus from "firefighting after the event" to "prevention before the event". According to Articles 30 and 31 of the Criminal Law of the People's Republic of China (amended on December 26, 2020 and implemented on March 1, 2021), companies and enterprises that commit acts harmful to society shall bear criminal responsibility in accordance with the law, and a dual punishment system is usually implemented. Enterprises should, on the basis of identifying high-frequency criminal risks (such as embezzlement, misappropriation of funds, contract fraud, false invoicing of VAT special invoices, and infringement of trade secrets), establish institutional red lines, hierarchical approval systems, compliance training programs, and reporting and self-inspection mechanisms. When necessary, professional lawyers should assist in carrying out compliance rectification for enterprises involved in cases. For more details, please refer to the following link:Criminal defense and legal services for criminal case filingAndBeijing Henglue Law Firm.

I. Problem background and typical scenarios

The criminal risks in corporate operations are evolving from "individual executives' personal behavior" to "systematic compliance deficiencies". Typical scenarios include: financial and business混同, sales staff falsifying expenses and embezzling funds; centralized powers in purchasing and storage positions, resulting in misappropriation of funds; signing contracts that clearly exceed the company's performance capabilities to boost sales, suspected of contract fraud; falsifying VAT invoices to reduce tax burdens; and core technical information being taken away by departing employees, constituting infringement of trade secrets. These risks often stem from the lack of internal control, unclear authorizations, and weak compliance culture. Once a case occurs, not only will the company be fined, but the directly responsible executives and other responsible personnel will also face personal freedom risks. Therefore, it is necessary to incorporate criminal compliance into corporate governance and, if necessary, combine it with other measures.Business and contract dispute services for enterprisesSynchronously sort out the contractual risks.

II. Key points of contention

The controversies and difficulties of corporate criminal compliance lie in the following aspects:

  • Determining whether an entity has committed a crime: Whether the act reflects the entity's will and whether it seeks benefits for the entity directly relates to whether the enterprise itself should bear responsibility.
  • Division of responsibilities: The unit crime implements a dual punishment system, and it is easy to confuse the sentencing and subject identification of direct responsible persons with those of individual crimes.
  • Compliance effectiveness: Whether the enterprise has established a "genuinely implemented" compliance system, or if it's just a formality on paper, and whether the rectification measures are recognized as effective.
  • Criminal justice linkage: The boundary between administrative violations and criminal offenses determines whether to impose administrative penalties or initiate criminal proceedings.

III. Professional analysis by Henglue Lawyers

Henglue Lawyers emphasize the "system-execution-evidence" triad in corporate criminal compliance. Taking a major criminal case handled by our firm as an example: In a vicious case of car crashes causing deaths and injuries in a certain area, the victims' families entrusted lawyers to intervene in the accompanying civil litigation. Through comprehensive review of the case file, the lawyers conducted systematic representation focusing on the defendant's subjective intent, whether the defendant surrendered voluntarily, the nature of the crime (intentional homicide or endangering public safety), and the compensation circumstances. Ultimately, the court adopted the lawyers' opinions, sentencing the defendant to death for intentional homicide and supporting the compensation requests in the accompanying civil litigation. Although this case involved an extreme individual crime, it reflects the underlying logic of corporate compliance - any major risks involving personal and property safety must be based on evidence chains and legal qualifications for handling; enterprises should also fix the boundaries of responsibilities, approval authorities, and remedial pathways with traceable systems before risks occur, to avoid difficulties in clarifying the responsibilities of the parties involved and the extent of their faults after the incident occurs.

IV. Practical suggestions and legal basis

At the legal basis level: Articles 30 and 31 of the Criminal Law of the People's Republic of China (amended on December 26, 2020) stipulate the crime of units and the system of double punishment; Article 271 stipulates the crime of embezzlement of duties, Article 272 stipulates the crime of misappropriation of funds, Article 224 stipulates the crime of contract fraud, Article 205 stipulates the crime of falsely issuing VAT invoices, Article 219 stipulates the crime of infringing trade secrets, and Article 393 stipulates the crime of bribing units; Articles 67 and 68 respectively stipulate surrender and meritorious service, and Article 37 involves prohibition of employment. Practical suggestions: Enterprises should hire professional lawyers to conduct annual compliance checkups and set up firewalls for high-risk positions; when encountering clues of suspected crimes, prioritize internal investigations to fix evidence, and, if necessary, actively carry out compliance rectifications and strive for leniency; for employees involved in cases, distinguish between the responsibility of the unit and the responsibility of individuals to avoid indiscriminately expanding risks, and refer to the implementation and asset disposal for reference.Creditor-debtor relations and enforcement case services.

5. Henglu Law Firm's Reminder

The prevention of corporate criminal risks cannot be accomplished simply by "buying a template system", but rather requires a governance system that is continuously operational, verifiable, and traceable. For enterprises that have already encountered criminal clues, the earlier they engage professional lawyers, the more likely they are to secure lenient treatment through compliance rectification, voluntary repayment, and cooperation with investigations; for enterprises that have not yet encountered risks, they should regard compliance as an "immune system" rather than a "decorative item". The boundaries between guilt and non-guilt, and the division of responsibilities between units and individuals, all highly depend on evidence and procedures. It is recommended to address these issues through the following measures:Beijing Henglue Law FirmEstablish a regular criminal compliance mechanism. This case was handled by Beijing Henglue Law Firm.Liu LiqiangThe attorney (practice certificate number: 11101200910454358, subject to the certificate issued by the judicial administrative organ) acts on behalf of clients and has defended their legitimate rights and interests through a comprehensive review of case files and evidence analysis. If you are currently establishing an enterprise criminal compliance system, it is recommended to seek advice as soon as possible to prevent potential legal risks in advance.

VI. Frequently Asked Questions

Q1: Which behaviors of enterprises are most likely to trigger criminal risks?

From the perspective of case handling practice, high-frequency criminal risks are concentrated in five categories: 1. Embezzlement and misappropriation of funds, which are common in capital-intensive positions such as sales revenue collection, procurement payments, and warehouse management; 2. Contract fraud, manifested as using fictitious entities, forging documents, or signing contracts and collecting payments despite lacking the ability to fulfill obligations; 3. Falsely issuing VAT invoices, either to fraudulently claim tax deductions or to have others falsely issue invoices on their behalf; 4. Infringement of trade secrets, such as employees taking away technical or operational information upon leaving the company; 5. Bribery of public officials to obtain improper benefits. Additionally, illegal fundraising, money laundering, and environmental pollution are also key risk areas. Enterprises should establish approval, reconciliation, rotation of duties, and audit redlines in these areas to reduce the scope for criminal activities at the source.

Q2: What are the differences in punishment between corporate crimes and individual crimes?

According to Articles 30 and 31 of the Criminal Law of the People's Republic of China, if a company, enterprise, institution, government agency, or organization commits acts that endanger society and are legally defined as corporate crimes, it shall bear criminal responsibility. For corporate crimes, the unit shall be fined, and the directly responsible person in charge and other directly responsible personnel shall be sentenced to criminal punishment, which is known as the "double punishment system". However, if the provisions of the special sections of the Criminal Law stipulate otherwise, they shall be implemented in accordance with those provisions. Compared with individual crimes, corporate crimes differ in terms of the subject, the burden of fines, and the scope of responsible persons: the enterprise is fined as an independent subject, and the specific responsible persons are held accountable, rather than making the entire enterprise "take the blame" or only punishing individuals. To determine whether a crime is a corporate crime, the key is to see whether the act has been decided by the unit and whether it is for the unit's interests. The relevant boundaries can be combined with the following factors for judgment:Business and contract dispute resolution services for enterprisesAnalysis.

Q3: How can enterprises establish an effective compliance risk prevention and control system?

The process can be divided into four steps: 1. **Risk Identification**: Identify high-frequency criminal charges and triggering scenarios based on industry and business operations. 2. **System Design**: Establish tiered authorizations, dual review, regular rotation, and independent audits for key processes such as finance, procurement, sales, taxation, and human resources. 3. **Operation Traceability**: Document all approvals, contracts, and payments with traceable written records to clearly distinguish between the "company's will" and "individual actions". 4. **Training and Reporting**: Conduct regular criminal compliance training and establish anonymous reporting and self-inspection channels. Identify issues promptly for internal handling or proactive compliance rectification. Systems cannot simply be displayed on the wall; they must be validated through spot checks and audits to ensure effective implementation. Otherwise, they will be difficult to use as a basis for assigning responsibilities after an incident occurs.

Q4: What should a company do if it discovers that an employee is suspected of committing a duty-related crime?

After discovering clues, one should stay calm and handle the matter in accordance with the law: First, fix the evidence and seal relevant accounts, contracts, chat records, and surveillance footage to prevent evidence from being lost or tampered with; Second, conduct an internal audit to clarify whether the behavior is an individual act or reflects the will of the unit, and determine whether the enterprise itself is at risk; Third, decide whether to report the case based on the circumstances. For cases involving employees' personal crimes, timely reporting can both mitigate losses and isolate the unit's responsibility. For cases involving the unit's responsibility, it is necessary to prepare for regulatory rectification simultaneously. During the process, attention should be paid to protecting the whistleblower, avoiding false accusations and infringements of privacy, and promptly consulting criminal lawyers to formulate an integrated plan for reporting the case, cooperating with the investigation, and implementing internal accountability, so as to prevent improper handling from putting the enterprise at a disadvantageous position.

Q5: Can the involved enterprises avoid being prosecuted if they carry out compliance rectification?

In eligible cases, the compliance rectification of the involved enterprises may lead to lenient treatment outcomes. In the compliance reform for enterprises involved in cases explored and established by China, enterprises suspected of corporate crimes, voluntarily pleading guilty and accepting punishment, and having the willingness and conditions for rectification can carry out compliance rectification under the third-party supervision and evaluation mechanism. If the evaluation is qualified, the procuratorial organ may make a decision on relative non-prosecution or a proposal for lenient sentencing in accordance with the law. However, compliance-based non-prosecution is not a "get-out-of-jail-free card". Its application scope, the effectiveness of the rectification, and the nature of the crime are all strictly limited, and it is generally not applicable to serious violent crimes. Enterprises should, with the assistance of lawyers, complete the rectification in a genuine and systematic manner and preserve the evidence to avoid formalistic responses, so as to gain the benefits of the system.

The above questions and answers are mainly based on the judicial practice in Beijing. There may be differences in the adjudication standards in other 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, so as to avoid missing the statutory time limit. →Criminal defense legal services·Attorney Liu Liqiang·Beijing Henglue Law Firm