The Anti-Cross-Border Corruption Law is coming. How can outbound companies and VASPs avoid pitfalls?

Written by: Xiao Sa Legal Team

This March, the National People’s Congress Standing Committee’s work report included “Formulating Anti-Cross-Border Corruption Law” as a key legislative task for the year, marking that China is about to enter a new stage of specialized legal governance in the field of anti-cross-border corruption. What impact will the new law have on Chinese outbound companies and other entities? How should businesses proactively respond to cross-border corruption?

Today, Sister Sa’s team will systematically review the legislative developments and practical challenges of anti-cross-border corruption, combining foreign experience to provide compliance guidance for Chinese companies “going global.”

1. Foreign Legislative Developments

Faced with global corruption challenges, developed countries like the United States, the United Kingdom, and France have taken the lead in establishing strict anti-corruption legal systems, mainly regulating jurisdiction scope, defenses, and other aspects. Their core content is summarized in the table below:

[Table omitted for brevity]

A comprehensive analysis of the systems in these three countries shows that current global anti-cross-border corruption legal regulation mainly exhibits three characteristics. First, emphasizing extraterritorial jurisdiction to extend the scope of application and effectively regulate overseas corruption behaviors; second, focusing on establishing preemptive prevention mechanisms, requiring companies to build effective internal compliance systems; third, coordinating punitive and preventive measures, with high fines as sanctions. These are complemented by deferred prosecution agreements, judicial settlements, and other means to encourage companies to conduct self-inspections and actively rectify issues.

These common rules are not only the crystallization of global anti-corruption governance experience but also provide important references for China to promote specialized legislation and improve corporate compliance supervision systems.

2. Pain Points in Corporate Compliance

Against the backdrop of parallel advancement of domestic and international legislation, Chinese outbound companies still face the following practical difficulties when fulfilling compliance obligations:

First, there is a deviation in compliance awareness. Some companies tend to prioritize business over compliance, viewing anti-cross-border corruption compliance as a cost burden, failing to integrate it into strategic planning and business decision-making; some even hold a fluke mentality or actively evade regulation.

Second, the boundaries of compliance are unclear. Companies have fuzzy standards and operational limits for identifying cross-border corruption behaviors, making it difficult to distinguish normal commercial dealings from improper commercial bribery, especially in scenarios involving overseas gift-giving, business entertainment, etc., where slight missteps may cross legal red lines.

Third, the compliance system is imperfect. Most companies have not established a complete compliance organizational structure; their compliance departments lack independence, making effective checks and balances difficult. Internal control systems are often superficial, with existing policies directly applying generic templates without adapting to specific business scenarios, resulting in poor operability.

Fourth, legal application across borders is chaotic. During cross-border operations, companies must comply with domestic laws, host country laws, and relevant international regulations. The rules vary significantly across jurisdictions—for example, China fully prohibits commercial bribery, while some countries permit small “facilitation payments,” which can easily lead to misjudging legal boundaries.

3. Insights on Corporate Compliance and Internal Control

In the face of increasingly strict domestic and international regulatory environments and existing pain points, companies need to shift from passive compliance to proactive compliance, elevating cross-border anti-corruption compliance to a strategic level, and transforming statutory compliance obligations into operational norms. The Sister Sa team offers the following suggestions:

(1) Standardize Cross-Border Compliance

To address the confusion caused by inconsistent legal application, companies should establish a regular legal tracking mechanism, systematically reviewing anti-corruption legislation in their operating regions. Additionally, they should develop an internal legal conflict assessment system, preparing alternative plans for conflicts to ensure their business activities are legally compliant under multiple regulatory frameworks.

(2) Improve Top-Level Governance Structure

Set up dedicated compliance management departments with full-time compliance personnel responsible for compliance review, risk stopping, and accountability for violations, ensuring independent compliance operations. Also, establish anonymous reporting channels, improve whistleblower protection systems, and promptly investigate internal violations to maintain corporate integrity.

(3) Strengthen End-to-End Risk Control Mechanisms

Conduct pre-approval anti-corruption due diligence during project entry, investment mergers, bidding, etc., and develop specific plans for high-risk areas to build a proactive defense; during operations, monitor risks in real-time through digital tools related to fund flows, contract execution, and third-party cooperation; after incidents, strictly enforce accountability, investigate violations promptly, and implement corrective measures to minimize corporate losses.

(4) Reinforce Third-Party Compliance Management

Implement strict access reviews for agents, subcontractors, suppliers, and other third parties, include specific compliance clauses in cooperation agreements, clarifying compliance standards and breach liabilities; conduct regular reviews and audits, and promptly address compliance risks arising from third-party issues.

In Conclusion

The Sister Sa team emphasizes that the formulation and implementation of China’s “Anti-Cross-Border Corruption Law” may pose additional enforcement risks for overseas entities. For example, multinational companies with specific connections to China—such as key technical support teams based in mainland China, certain payment or reimbursement processes in China, or key business risks emerging in China—must reassess these connection points’ risks.

The team predicts that China’s “Anti-Cross-Border Corruption Law” may, similar to the US FCPA, assert jurisdiction whenever there is a certain connection to China. Therefore, many overseas cryptocurrency exchanges and VASPs should reevaluate the risks arising from the law within their relevant business lines.