Political scientist: Macau may face impact from new China corruption law

[Photo: Renato Marques]

A proposed Chinese law targeting cross-border corruption could have implications for Macau, particularly for companies and individuals operating across mainland China and international markets with illicit assets, political scientist Sonny Lo Shiu Hing said.

“The law covers not only corruption but also money laundering in areas external to China, which can be interpreted to include both Hong Kong and Macau,” Lo told the Times.

However, Lo said the proposed legislation is unlikely to affect Macau’s role as a tourism and gaming destination or its integration with Hong Kong and other cities in the Greater Bay Area.

China’s top legislature has begun reviewing a draft law that would broaden the country’s legal framework for tackling corruption overseas, recovering illicit assets and strengthening corporate compliance.

Lo said the legislation would cover Chinese nationals who bribe officials or organizations overseas, while also addressing bribery of mainland officials by foreign individuals or organizations.

The Anti-Cross-Border Corruption Law was submitted for its first reading to the Standing Committee of the National People’s Congress on Aug. 25. The draft contains six chapters and 47 articles covering the scope of cross-border corruption, institutional responsibilities, international cooperation, corporate compliance and legal liability.

According to Chinese authorities, the law would help address longstanding difficulties in detecting corruption, gathering evidence, recovering illicit proceeds and securing convictions in cases with an international dimension.

Broad definition of corruption

The draft defines cross-border corruption broadly, including bribery by Chinese citizens and companies of foreign public officials or officials of international public organizations, as well as bribery by overseas individuals and companies of Chinese public officials, state institutions, state-owned enterprises and related persons.

It also covers corruption-related offenses committed by Chinese citizens and companies overseas, including embezzlement, abuse of power, dereliction of duty, rent-seeking, favoritism and misuse of state assets. Conduct carried out partly overseas but producing related results in China may also fall within the draft’s scope.

The text further includes “acts involving individuals suspected of corruption fleeing overseas or the cross-border transfer” of illicit assets. It says China will oppose the use of its territory as a safe haven for corrupt individuals or assets “under any pretext” and conduct practical and effective international cooperation in pursuing fugitives, recovering illicit assets and returning assets.

Sonny Lo

It also contains a sovereignty clause, stating China may take countermeasures or blocking measures if another country improperly applies its anti-corruption laws extraterritorially against Chinese citizens, companies or organizations in ways that harm China’s sovereignty, security or development interests.

New enforcement framework

The draft would establish a national cross-border anti-corruption mechanism led by the National Commission of Supervision. Departments responsible for foreign affairs, public security, justice, finance, commerce, anti-money laundering, auditing, state assets, financial regulation, securities regulation and cyberspace administration would participate according to their responsibilities.

The framework would coordinate investigations, prosecutions and international cooperation. It would also require authorities to monitor cross-border corruption risks in sectors considered vulnerable to bribery and related financial misconduct.

The draft allows Chinese authorities to seek assistance from overseas institutions in locating suspects, verifying financial accounts, obtaining testimony and documents, freezing assets, confiscating illegal proceeds and returning recovered property. It also provides for cooperation involving extradition, the transfer of sentenced persons, repatriation and overseas prosecution.

However, the legislation would restrict foreign agencies and individuals from independently conducting anti-corruption investigations in mainland China without Chinese approval. Domestic organizations and individuals would also be prohibited from providing evidence or other assistance to foreign bodies without authorization.

Corporate responsibilities

A significant part of the draft focuses on companies involved in cross-border business. Domestic companies with overseas branches, subsidiaries or investments, as well as foreign companies operating in China, would be required to conduct business lawfully and ethically, the draft states.

Companies would have to establish integrity and compliance systems proportionate to their size, business scope and revenue. Those systems would cover decision-making, implementation, supervision, risk assessments, internal reporting and investigations.

The draft also calls for stronger oversight of third-party agents and contractors. Companies would be expected to conduct due diligence on people and organizations acting on their behalf and prevent third parties from being used to carry out corrupt practices.

The draft also sets out administrative, criminal and civil consequences for cross-border corruption. It provides for the confiscation and recovery of illegal proceeds, disciplinary action against public officials and heavier penalties for repeat offenses, refusal to return illicit gains or conduct causing serious harm to national or public interests.

Businesses would also have to maintain accurate accounting records and financial reports and ensure that their overseas operations are subject to appropriate financial controls and audits. State-owned enterprises would face additional expectations over overseas personnel, major projects and large transactions.

Lo said the proposed obligations would reach beyond state-owned enterprises. “The law means SOEs and even private sector staff and executives are all covered — very extensive,” he said.

International cooperation and uncertainties

The draft emphasizes the United Nations Convention against Corruption as the main channel for international cooperation and calls for cooperation based on sovereignty, equality, mutual benefit and multilateralism.

Lo described the proposed law as “a very assertive and aggressive anti-corruption and anti-money laundering law.” He said its wider significance would depend partly on how authorities and courts apply it.

“The sentencing and the extent of punishment are unclear,” Lo said, pointing to the discretion that could be exercised by judges.

On Macau, Lo said the proposed law is unlikely to affect the city’s role as a tourism and gaming destination or its integration with Hong Kong and other cities in the Greater Bay Area.

On whether closer enforcement and cross-border cooperation could constrain tourism flows, investment or business mobility, Lo said the law would create “no constraint and no impact on confidence.”

Instead, he said, the measure should be understood as a warning to individuals and businesses on both sides of the border. “Rather the law warns mainlanders not to use bribery, and also Macau people not to accept bribes or pay bribes to mainlanders,” Lo said.

The bill remains under review and is not yet law.

Draft laws in China commonly undergo additional readings before a final vote, meaning the text and its implementation provisions could still change.

In 2025, China repatriated 963 corrupt fugitives, according to the country’s top anti-graft body, while its Operation Sky Net campaign has continued to target overseas fugitives and the movement of illicit assets. Operation Sky Net was first launched in 2015.