cCompliance can be viewed through two main dimensions: (i) ensuring that the operational and administrative procedures of the Company and its personnel comply with normative requirements including laws, regulations, regulatory guidelines, industry standards and articles of association; and (ii) involve implementing governance measures to achieve the above objectives.
original criminal compliance
As an offshoot of the compliance landscape, the concept of criminal compliance is not ingrained in the American legal system. Rather, it has emerged in recent years due to a combination of factors including the increasingly complex patterns of economic crime, the pressing need for entrepreneurs to protect against criminal risk, innovative approaches for legal practitioners based on compliance principles, and reform initiatives by prosecution authorities. .
Criminal compliance is about exposure to criminal risks faced by companies and the individuals associated with them. It differentiates itself from both traditional criminal procedures and general compliance strategies. The approach to properly managing these risks includes three main phases: prevention, response and treatment.
preventeon me. In the field of criminal offenses, prevention is of paramount importance. This is largely due to the unique nature of criminal proceedings. On the one hand, as the criminal investigation progresses, the possibility for the company or its employees to evade accusations gradually diminishes. On the other hand, once a company is involved as a criminal suspect, it inevitably incurs the negative repercussions of discredit and operational disruptions.
Criminal risk prevention entails two different layers of approach:
- sustainable prevention and control. Preventing and controlling criminal risk is a central aspect of compliance risk management. Organizations with strong operational foundations can prevent potential criminal risk by establishing comprehensive compliance management systems, identifying and assessing criminal compliance risks, formulating and improving risk control measures, and nurturing a culture of compliance.
- Targeted prevention and control of crime-related risks. Criminal risks often send clear signals, manifesting themselves in the form of inquiries and penalties from external regulatory authorities, or as cases of internal employee violations of regulations. Quick action becomes imperative in such scenarios. Engaging criminal compliance professionals immediately helps companies effectively stop the transition of public risk to criminal offences. When an organization is subject to regulatory scrutiny, a criminal compliance attorney can assist it in assessing the risk of a criminal offense occurring, preparing defense materials, applying for and participating in a hearing, and negotiating with regulatory authorities to avoid transferring cases to the public security authority.
Answer. Once the criminal investigation process begins, the focus of criminal compliance shifts to the second phase – responding to a criminal investigation.
In traditional criminal defense practices, attorneys primarily review case documents.
This includes examining evidence obtained during the investigation (after the Public Security authorities have completed their investigations and referred the case to the Public Prosecution) to identify errors and omissions in the investigation materials and then present the defense’s points of view.
However, Criminal Compliance places the core of its efforts in the investigative phase:
- To understand the essence of the objective evidence collected by the Public Security Agency, analyze investigation methods and identify the main conviction circumstances;
- To conduct targeted compliance investigations, collect objective evidence relevant to elements of the circumstances of conviction, and accurately reconstruct the factual circumstances of the case; And
- Preparing an investigative report that honestly reflects the facts of the case. This report can be submitted directly to the case-handling authority or used as the basis for subsequent requests to the prosecuting authority, requesting the retrieval of evidence and presenting the defense’s views.
The criminal compliance response strategy differs from the traditional mode of passive defense and catching errors after the fact. Instead, it adopts a proactive approach by providing a first-hand overview of the facts of the case to the authorities dealing with the cases. This strategy aims to eliminate presumptions of guilt and maximize opportunities for the defense of innocence.
treatment. Since 2020, the Supreme People’s Procuratorate has launched a pilot initiative known as compliance reform for companies involved in cases. This reform provided an opportunity for companies that faltered during their operations by introducing a third stage – post-treatment for the companies involved.
This new third stage typically includes the following components:
- submitting a compliance request to a case-handling authority as appropriate to the circumstances of the institution concerned;
- assist organizations in developing and implementing compliance plans to establish effective compliance management systems; And
- Assist organizations in undergoing evaluation assessments at the end of the compliance examination period.
For companies involved in cases, building a robust compliance system leads to more lenient recommendations on sentencing. This process serves as a remedy and a starting point for sound business practices in the future.
Traditionally, criminal legal activities have focused on criminal defense and reporting. Criminal acts are expanding with the escalation of economic crimes in the general criminal scene and the increasing complexity of economic crime patterns.
New business models such as criminal compliance, victim representation in litigation, applications from third parties with significant interests to participate in litigation, consolidated civil and criminal representation in cross-border cases are emerging, which is also a consequence of the trend towards non-litigation criminal businesses.
By integrating compliance practices into criminal procedures, criminal compliance provides parties with a variety of ways to protect their rights at different stages, and is expected to become a new weapon for organizations seeking self-protection.
Wang Wenying is the deputy director and co-founder, and Fu Xuehang is a fellow at Starrise Law Firm
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