China considers bill to combat cross-border corruption
In China, the country’s top legislative body is considering a draft law to combat cross-border corruption. The document provides for extending anti-corruption mechanisms to the overseas activities of Chinese companies, officials, state bodies and state-owned enterprises, as well as measures against foreign investigations that Beijing considers an improper extraterritorial application of legislation, South China Morning Post reports.
Asset control and cooperation
The draft covers overseas bribery, corruption involving Chinese officials, state bodies and state-owned enterprises, travel abroad by people suspected of corruption, the cross-border movement of corruption-related assets, as well as certain actions outside China that have consequences within the country.
A centralized mechanism led by the National Supervisory Commission is expected to coordinate the work of about a dozen state bodies. Wang Jiangyu, a law professor at the City University of Hong Kong, noted that cross-border corruption investigations often require tracking payments, corporate documents, beneficial ownership, electronic data and overseas assets.
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Restrictions on foreign investigations
Article 6 of the draft allows blocking and countermeasures to be applied if other states use anti-corruption enforcement as a pretext to restrict Chinese interests or improperly apply extraterritorial laws. Article 26 prohibits foreign organizations and individuals from conducting anti-corruption investigations or collecting evidence in China without direct state authorization. Chinese domestic entities will also be unable to assist foreign bodies without prior approval.
Lawyers point out that enforcement of the law could create difficulties for businesses, particularly in Singapore, where Chinese enterprises have regional management, treasury and holding structures. China’s requests there will be considered under Singaporean legislation, procedural requirements and evidentiary standards. Possible points of conflict include data disclosure, the freezing or confiscation of assets, and parallel investigations.
Requirements for companies
Articles 29–34 require enterprises involved in cross-border operations to establish integrity and compliance management systems. This applies to Chinese companies operating overseas and foreign multinational corporations operating in China. Article 33 sets requirements for third-party due diligence, while Article 45 provides for separate administrative liability for failure to comply with compliance requirements. Companies that fail to remedy control deficiencies may face suspension of operations or license revocation even without a proven case of bribery.
