Corporate crime control in China: an observation from culture perspective

Date02 July 2019
Published date02 July 2019
DOIhttps://doi.org/10.1108/JMLC-09-2018-0058
Pages472-479
AuthorJing Lin
Subject MatterFinancial risk/company failure,Financial compliance/regulation,Financial crime
Corporate crime control in
China: an observation from
culture perspective
Jing Lin
Key Laboratoryof Evidence Science (China University of Political Science and Law),
Ministry of Education, Beijing,China
Abstract
Purpose The purposeof this paper is to critically evaluaterole of penal approach in corporatecrime control
and to assess if compliance program can beaccepted in China, the largest developing country with relatively
littleregulatory capacity and an immaturenancial market when comparedto developed economies.
Design/methodology/approach Based on the general corporate crime control theory, a perspective
from legal culturewill be specially followed in studying controlinstruments.
Findings This paper found that the criminal control approach has its limitations in corporate crime
control in China and, therefore, argued that compliance programs are highly consistent with Asian legal
cultures. However, unlike many developed economies, compliance programs have not been included in
sentencingguidelines yet, which has been left to judgesdiscretion.
Originality/value The concept of compliance as a control instrument has been widely discussed in
developed economies. Limited research observes areas such as China, which faces a notable dilemma, i.e.
economicshas been speedily booming, whereas regulation rules are relativelyleft behind.
Keywords China, Compliance, Corporate crime, Corporate crime control, Penal approach
Paper type Research paper
1. Introduction
The globalization of the economy has extended the threat of economic crime beyond borders so
that it has become not only a domestic issue, but also a worldwide issue. A recent survey by
PWC shows economic crime continues to be a major concern for organizations of all sizes,
across all regions. On a global basis, 49 per cent of the respondents indicated that they had
experienced an economic crime in the survey period. Though a slightly lower percentage in the
region of Asia Pacic (46 per cent), economic crime remains a signicant concern for Asia
countries (PWC, 2018). The Association of Certied Fraud Examiners (ACFE) estimates that
the typical organization, on a global basis, loses 5 per cent of revenues each year to economic
crime. If applied to the 2013 estimated Gross World Product, the nancial loss to economic
crime amounts to nearly US$3.7tn (ACFA, 2014). Economic loss is not the only concern that
companies face. The PWC survey shows that, besides nancial loss, economic crime causes
non-nancial damage to employee morale (48 per cent), business relations (38 per cent),
corporate/brand reputation (36 per cent) and relations with regulators (30 per cent) (PWC, 2018).
With the open-door policyand a deepening integration of Chinas economy into the world
economy, China has become an important player in the world economy, and meanwhile, a
magnet for corporate crime. For example, in 2005, the Chinese government reported that
there were 240 major criminal violations in Chinas state-owned commercial banks in the
rst half of that year, accounting for one-third of the countrys total bank scandals and a
total loss of ¥1.6bn (US$198m)(Pontell and Geis, 2010).
JMLC
22,3
472
Journalof Money Laundering
Control
Vol.22 No. 3, 2019
pp. 472-479
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2018-0058
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm

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