Avoiding criminal risk for entertainment, social media platforms

Fraud, gambling and organised obscene performances are increasingly prevalent on live-streaming and one-to-one chat platforms. Moreover, game-streaming platforms are frequently reported to have issues with gambling, money laundering and other illicit activities.

Analysis

There is a view that police are tightening criminal policy on entertainment and social media platforms. Others claim that financial constraints in some Chinese cities have prompted authorities to target these platforms for monetary gain.

However, these views are biased because Chinese authorities have consistently prioritised cracking down on illegal activities such as fraud, money laundering, obscene performances and casinos. Promulgated in 2015, amendment IX to the Criminal Law added the crime of providing aid for criminal activities in relation to information networks. It aims to get tough with complex online crimes with connections both inside and outside China.

Criminal legislation generally lags behind social and economic development, and judicial development further falls behind the legislation. Following the enactment of any criminal law, there is a need for a judicial learning process. Capabilities are continually improving through practical experience, particularly in the era of rapid internet development.

Prior to judicial intervention, illicit activities on entertainment and social media platforms were steadily proliferating. The frequent recent penalties imposed on these platforms are an inevitable result of an increasing audacity of criminal activities on the platforms, and the tightening of criminal judicial regulation.

Criminal liability

Three party roles. The first party role is that of the platform operator. The platform operator is primarily responsible for the technical implementation and ecological operation of platform services. As internet service providers, they should ensure their platforms are free from illegal or criminal activities.

The second role encompasses business operators such as talent agencies and live streamers. Agencies sign co-operation agreements with the platform and live streamers engage in performance activities during live broadcasts. Profits are obtained by agencies and then distributed to live streamers.

The third role is the consumer, who converts their funds into virtual currency to play games, watch content and reward live streamers for spiritual satisfaction. Some platforms also recruit, train and manage live streamers by themselves, serving as both platform and business operators.

Specific scenarios. Illegal activities on any platform are primarily carried out by the platform operator or business operators. A platform operator will be held criminally liable under the following circumstances:

• It directly commits the offence, such as organising live streamers employed and managed by the platform to engage in gambling, fraud or money laundering. In such cases, the operator is held criminally liable as the principal offender.
• The platform operator indulges employees who engage in illegal activities such as gambling and fraud. Some senior managers may not be directly involved in such activities but they are fully aware and leave these activities unchecked. In such cases, employees are deemed as principal offenders and senior managers are held criminally liable as accomplices.
• The platform operator allows talent agencies or live streamers to engage in illegal activities. In such cases, if the operator has a specific and clear understanding of the committed crimes, it is considered an accomplice. If it has only an abstract understanding, that may constitute the crime of providing aid for criminal activities in relation to information networks.

Compliance system

The only way for platform operators to keep clear of crimes is to establish an effective compliance system.

From the top. Top management must maintain a strong commitment to compliance. Specifically, senior managers, including the chairman and CEO, play a pivotal role in fostering a compliance concept and culture within a company. If senior managers allow illegal or criminal activities on the platform in pursuit of profits, achieving compliance across the organisation becomes unattainable, and the platform’s involvement in criminal activities becomes inevitable.

Systematic. Platform operators must establish a compliance management and organisational system. Given the potential risks of illegal activities that may arise on entertainment and social platforms, it is necessary to set up a compliance department or appoint a compliance specialist. Only professional compliance personnel can evaluate illegal and criminal risks in platform operations.

The compliance department must have a list of clear compliance obligations. It should be able to identify illegal and criminal risks through regular compliance interviews and continually review and resolve issues.

Additionally, a technical risk control department and a human resources review department should be established. Risk control technology must meet market standards, and human review personnel must be sufficient and professional.

Collaborative efforts of operation, compliance, risk control and auditing departments are needed. The compliance department must evaluate new features and activities before being launched online. Continual improvement in risk control capabilities, including the addition of sensitive words and enhanced skills, is vital. Furthermore, audit strategies should be constantly refined. Risk control and auditing should align their actions with compliance decisions, and operations should prioritise compliance as a core objective.

Commit and train. Companies must promote their compliance commitments and provide training for all staff. The compliance department must have well-defined job responsibilities and effectively convey risks and job responsibilities to each employee through compliance commitment letters and training courses, ensuring all employees have a clear understanding of compliance boundaries. This promotes the development of compliance literacy.

Controls. Companies must strengthen their internal controls to prevent employees from colluding with external criminals.

Cooperation. Obviously, companies must co-operate with the law enforcement authorities, promptly turn over illegal and criminal clues to enforcement authorities, and ensure robust enforcement against illegal activities on platforms.

You Tao is the chief editor and senior compliance director at Xinglai Technology