Through the lens: anti-bribery and corporate risk across Asia

Chinese enterprise anti-fraud and anti-bribery trends 2025

In 2025, the anti-fraud and anti-bribery efforts of Chinese enterprises entered a critical phase characterised by “upgraded proactive governance and deepened full-chain prevention and control”. Driven by the dual forces of stringent regulatory oversight and market pressure, various market entities including state-owned enterprises (SOEs), private enterprises and internet platforms accelerated the construction of anti-fraud systems.

They implemented targeted measures focusing on high-risk areas such as supply chains, procurement and capital operations. Inter-enterprise joint punishment mechanisms gradually took shape, leading to a marked improvement in the level of corporate integrity and compliance.

China governance and prevention: Anti-fraud strategies

In 2025, amid tightened regulation, improved legislation and growing capital market focus on ESG (environmental, social and governance), corporate anti-corruption evolved from a mere internal control issue to a core credibility matter critical to business survival and development.

Anti-fraud efforts entered a new phase of systematic governance and precision prevention: law enforcement expanded to more private enterprises and supply chain terminals, with individual accountability and judicial referrals becoming standard practice; governance extended beyond traditional procurement and sales to cover R&D, traffic operations, capital transactions and overseas businesses; and system building shifted from post-event audits to a “system + technology” dual-driven model for proactive prevention, striving to establish a long-term mechanism to “deter, restrict and eliminate corruption”.

Targeted governance in China sectors: Supply chains, pharma

In 2025, anti-fraud and anti-bribery efforts focused on power-concentrated and capital-intensive core business links, with industry-specific targeted governance delivering tangible results.

Supply chain and procurement: Core of private enterprise anti-corruption. Enterprises in manufacturing, retail and other sectors cracked down on procurement rent-seeking and supplier commercial bribery, implementing full-chain controls through supplier integrity regulations and blacklists. For example, an athletic apparel and footwear group investigated 45 fraudulent suppliers and partners found to be violating integrity clauses and released its first list of 10 entities with which it would never co-operate.

Large manufacturers enforced mandatory rotation and conflict-of-interest declaration systems for high-risk roles such as procurement and quality control, breaking long-standing collusive interest transfer chains through procedural improvements. This indicates that private-sector anti-corruption is advancing from internal investigations to collaborative governance of the supply chain ecosystem.

Internet industry: Focus on anti-corruption in traffic and capital operations. To address rent-seeking risks in traffic competition, advertising placement and capital operations, leading internet platforms enhanced their digital auditing and intelligent risk-control capabilities.

Typical cases demonstrated that corruption in internet enterprises not only erodes profits but also triggers capital market shocks – one leading internet platform saw its market value drop by USD2 billion in a single day due to a corruption scandal, highlighting the critical role of compliance in maintaining capital market confidence.

Financial sector: New challenges in anti-money laundering. As digital finance advanced, money laundering methods became increasingly intelligent and concealed, posing significant challenges to anti-money laundering efforts. Meanwhile, regulation was further tightened: following the implementation of the new Anti-Money Laundering Law on 1 January 2025, supporting measures were rolled out sequentially, further consolidating the primary responsibility of financial institutions.

Pharmaceutical sector: Sustained high pressure on anti-commercial bribery. Against the backdrop of ongoing in-depth anti-corruption drives, law enforcement against commercial bribery in the pharmaceutical sector remained frequent and targeted in 2025.

The sector’s anti-corruption efforts featured two key traits: first, penetrating supervision, extending from traditional sales links to the entire chain, including R&D co-operation, clinical trials and academic promotion; and second, the simultaneous investigation of both bribery and acceptance of bribes, with harsher penalties imposed on bribing pharmaceutical enterprises and their agents – including product delisting from bidding platforms and inclusion in untrustworthy lists – significantly raising the cost of non-compliance.

SOEs: In-depth governance of ‘profiteering from the enterprise’. Efforts targeted SOE executives and key positions, rigorously investigating related-party transactions and interest transfers. Governance in 2025 emphasised thorough investigations, loss recovery and long-term deterrence.

For instance, Yuan, a former deputy general manager of a Chinese petroleum company, was prosecuted for accepting bribes by leveraging his former positional influence even after retirement, reaffirming that “retirement is not a safe haven”. Discipline inspection and supervision authorities at all levels pushed SOEs to integrate anti-corruption requirements into key processes such as investment decision-making, property rights transactions and material procurement, aiming to eradicate the root causes of corruption.

AI and technology empowerment: China anti-fraud measures

Technology played a contradictory role in the 2025 anti-fraud landscape: while driving the upgrading of fraud methods, it also served as the core driver of risk-control system development.

AI fuels fraud evolution. Fraudsters increasingly used generative AI to create indistinguishable fake invoices, contracts and audit reports; employed deepfake technology to mimic executives’ voices or images for fraudulent fund transfer approvals; and leveraged AI to generate massive volumes of “normal” behavioural data to cover up abnormal transaction trails.

AI boosts risk control. Leading enterprises responded by using technology to combat technology, building intelligent risk monitoring models. By applying machine learning and graph computing to construct dynamic knowledge graphs, they could automatically identify hidden fraud networks, such as related-party transactions and bid rigging, greatly enhancing the accuracy and timeliness of risk early warnings. A key enterprise utilised generative AI to achieve real-time monitoring of abnormal transaction patterns, effectively improving the efficiency of corruption risk detection.

China’s global anti-fraud and anti-bribery co-operation

With the deepening globalisation of Chinese enterprises and the convergence of international regulatory environments, anti-fraud and anti-bribery challenges and countermeasures for Chinese enterprises exhibited distinct “internationalisation” traits in 2025, making international co-operation imperative.

Alignment with international compliance standards. To meet the expectations of international customers, investors and capital markets, a growing number of Chinese enterprises “going global” have adopted internationally recognised compliance standards and undergone audits by international institutions. This requires enterprises to elevate their anti-corruption policies, processes, training and cultural building to world-class standards.

Addressing global fraud risks. To tackle cross-border interest transfers and money laundering via offshore companies, virtual currencies and complex trade structures, leading Chinese enterprises have joined international anti-fraud organisations, shared information on high-risk third parties and learned best practices from global peers, serving as key approaches to enhancing global risk-control capabilities.

Regularisation of cross-border investigations and law enforcement co-operation. Fraud investigations involving overseas branches or suppliers of Chinese enterprises often span multiple jurisdictions. Enterprises need to co-ordinate lawyers, accountants and investigation teams across countries, conduct compliant investigations in accordance with local data privacy and labour laws and maintain necessary communication with local law enforcement agencies. Bilateral co-operation mechanisms between China and some countries in anti-corruption law enforcement have also played an increasingly prominent role.

Conclusion

2025 marked a pivotal year for the maturation of anti-fraud and anti-bribery efforts among Chinese enterprises. They have evolved from a campaign-style crackdown to a governance philosophy embedded in corporate DNA, relying not only on institutional constraints but also on technological empowerment. They address immediate risks while building a future-oriented “immune system”.

For all market participants, proactively embracing this transformation and internalising compliance as a core development driver is the surest path to steady progress in an era of uncertainty.

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Hong Kong financial fraud: Conspiracy, listing rule breaches

Corruption and bribery have long been central concerns in Hong Kong’s legal and regulatory landscape, undermining market integrity and public trust. “Conspiracy to defraud”, an offence that captures schemes where individuals collude to dishonestly deceive victims for unlawful gain, is a wider concept and is usually carried out by means of bribery, the acceptance of advantages and the receipt of benefits in a corrupt environment.

Today, conspiracy to defraud is among the most commonly prosecuted offences in Hong Kong, which often involves complex networks of actors – professionals, intermediaries and insiders – working together to manipulate systems or conceal misconduct. This article particularly examines conspiracy to defraud through the financial lenses of insurance fraud and breaches of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong (listing rules), illustrating how conspiracies exploit institutional vulnerabilities.

Understanding the offence of conspiracy to defraud in Hong Kong

Conspiracy to defraud in Hong Kong is a common law offence punishable under section 159C(6) of the Crimes Ordinance (cap 200), with a maximum penalty of 14 years of imprisonment.

The authoritative definition was laid down by the Court of Final Appeal (CFA) in Mo Yuk Ping v HKSAR (2007) as “by becoming a party to an agreement with another or others to use dishonest means (1) with the purpose of causing economic loss to, or putting at risk the economic interests of, another; or (2) with the realisation that the use of those means may cause such loss or put such interests at risk”. See also: HKSAR v Cheng Chee-Tock Theodore (2016).

HKSAR v Chen Keen (2019) inter alia discussed the circumstances when an agreement has been reached, namely by showing that the co-conspirators agreed to act in concert to achieve a common object or purpose. So long as a common fraudulent purpose has been agreed on, the absence of (1) direct communication with one another; (2) reaching an agreement at the same moment; or (3) precise steps to be taken is not detrimental to the establishment of an agreement.

The CFA further confirmed that the test for dishonesty is the two-stage Ghosh test, requiring determination of (1) whether, according to the ordinary standards of reasonable and honest people, what was done was dishonest; and (2) whether the defendant themselves must have realised that what they were agreeing to do was dishonest by those standards.

Insurance fraud and conspiracy to defraud in Hong Kong

One of the most common ways to commit the offence of conspiracy to defraud is by colluding in making bogus insurance claims and thereby gaining advantages. This is particularly so as Hong Kong is a leading insurance hub in Asia, with 164 insurance companies in Hong Kong generating gross premiums of more than HKD560 billion (USD71.9 billion) in 2019. That said, it exposes vulnerabilities, as the vast network of agents and commission-based structures creates opportunities for abuse and fraud.

In several recent cases, authorities illustrate the scale of these problems:

(1) In HKSAR v Wong Fung Yi and Another (2025), a district manager and three of her downline agents conspired to submit 32 false policy applications, deceiving the insurer into paying more than HKD1.4 million in commissions and bonuses.

(2) In HKSAR v Lo Yin Wah and Ors (2025) the branch manager of an insurer recruited dummy agents to falsely claim the handling of 478 policies, resulting in HKD52 million in fraudulent payments.

(3) Similarly, three agents in HKSAR v Li Chung Hing and Another (2024) colluded with a handling agent to exaggerate policyholder salaries and secure a large sum of commissions.

(4) The insurance agent in HKSAR v Wong Ka Keung and Ors (2024) was, among others, convicted since he took out for himself six insurance policies with critical-illness coverage, conspired with others to arrange for a critically ill patient to falsely pose as the defendant, causing the insurer to pay out compensation totalling HKD11.28 million. In this regard, lay citizens may wish to exercise extra caution when approached by insurance personnel offering something for a price.

Recognising these risks, the Independent Commission Against Corruption (ICAC) has collaborated with the insurance industry in issuing the Corruption Prevention Guide for Insurance Companies, which identifies common malpractices such as the use of bogus documents, falsification of claims and diversion of business for bribes, and emphasises the importance of ethical culture, corporate governance and internal controls, offering safeguards across core operations.

After all, fraudulent claims may be facilitated through the bribery of agents, medical professionals or officials. Corruption within institutions can further enable fraud by weakening oversight, allowing networks of insiders to manipulate records, inflate payouts or even suppress investigations.

Listing rules violations and conspiracy to defraud in Hong Kong

Another aspect that would lead to criminal liabilities under the offence of conspiracy to defraud is the non-compliance of listing rules that extend to listed issuers, directors, CFOs, compliance officers, Securities and Futures Commission-licensed placing agents and professional intermediaries. Very often, conspiracies flourish within a corrupt environment where conflicts of interest arise, and compromised officials make fraud easier to execute and conceal.

In a recent unanimous decision in HKSAR v Mak Kwong Yiu & Others (2025), the CFA restored criminal convictions of four persons, including senior executives of a then-listed company Convoy Financial Holdings Limited (CFHL), for conspiracy to defraud arising from the deliberate concealment of a connected transaction through the use of an intermediary “front” company. In fact, the ICAC’s investigation of this case first started after receiving complaints in 2017, which alleged breaches of the Prevention of Bribery Ordinance and the Securities and Futures Ordinance.

What happened was that CFHL engaged in bond placements as part of its strategy to expand its loans business. Under Hong Kong’s Capital Investment Entrant Scheme, CFHL targeted Chinese mainland investors seeking residency in Hong Kong. These investors, referred to as “1019 consultants’ clients”, borrowed funds directly from CFHL to subscribe to the company’s bonds. By structuring the transactions in this way, the company generated profits through the interest rate differential between the loans it extended and the bond subscriptions it received.

The CFA in gist held that: (1) a transaction may qualify as a connected transaction under rule 14A.25 of the listing rules even without a direct contractual link; (2) the principle of “substance over form” applies, meaning that the use of a “front party” lacking genuine commercial purpose – arranged solely to involve a connected person – will still trigger chapter 14A obligations; and (3) deliberate concealment of a director’s conflict of interest and avoidance of independent oversight can be grounds for criminal liability for conspiracy to defraud.

Similar cases arose before the CFA decision involving non-compliance with listing rules, including HKSAR v Yuen Chi-ping & Ors (2024). The case concerned loans issued by Applied Development Holdings Limited (ADH), a listed company, to On Tai International Credit Limited (OTI), in which D2 was a major shareholder. It was alleged that D1, serving as ADH’s CEO and executive director, concealed his marital relationship with D2. It was further claimed that D1 collaborated with D2 and D3 in orchestrating fraudulent conduct.

After trial, they were acquitted since (1) the evidence did not establish that D1 was aware of any nominee arrangement between D2 and D3 concerning D3’s shareholding in OTI; (2) given the circumstances, multiple possible explanations existed for such an arrangement, and there was no certainty that it served a dishonest purpose aimed at evading listing rules; and (3) there was no evidence of an “agreement” among all defendants or of “dishonesty”, both essential elements of conspiracy to defraud.

Another instance is where the prosecution, among others, alleged that the defendants defrauded the SEHK, listed company Benefun International Holdings Limited (Benefun), and Benefun’s existing shareholders and potential investors, by dishonestly: (1) falsely representing that the acquisition of another company, Ample Rich Enterprise Limited (Ample Rich), for the consideration of HKD500 million was a transaction conducted and concluded at arm’s length; (2) concealing the fact that HKD100 million of the HKD500 million was to be paid to the chairman of Benefun and/or his authorised person(s); and (3) falsely representing that the acquisition would not result in a change in the composition of Benefun’s board of directors.

It was further alleged that the defendants: (4) caused the SEHK to approve the publication by Benefun of an announcement and a circular in respect of the acquisition; and (5) caused Benefun to approve, confirm and ratify an agreement in relation to the acquisition. The defendants respectively faced charges of conspiracy to defraud and conspiracy to offer advantages to an agent: Secretary for Justice v Lo King Fat & Ors (2016). This is another case in point demonstrating the interplay of the two charges, and how bribery and corruption are common methods used within conspiracies to defraud.

Conclusion

Conspiracy to defraud has become a cornerstone of Hong Kong’s enforcement framework, reflecting its breadth in tackling complex misconduct across financial markets, whether through fabricated insurance claims, deceptive practices breaching listing rules or schemes fuelled by bribery and corruption. These intertwined offences not only distort fair competition but also erode institutional integrity, underscoring the need for heightened awareness. One must take care to avoid inadvertently falling into any of the above-mentioned traps.

Ultimately, joint efforts, including sustained vigilance, rigorous enforcement and transparent governance, remain essential to preserving investor confidence and safeguarding the credibility of Hong Kong’s reputation as a global financial hub.