On September 7, 2026, King&Capital Law Firm successfully hosted a forum in Beijing titled “Prevention and Defense Against Criminal Risks of Corporate Financial Crimes in the Context of New Financial Business Models.” Co-hosted by the King&Capital Research Center for Corporate Crime Defense and Prevention and the King&Capital Research Center for Fraud Crime Defense, the event focused on criminal defense strategies and compliance measures for financial institutions. It featured in-depth discussions on the practical determination of key criminal charges—such as the crime of illegally issuing loans, financial fraud, and money laundering—as well as the scope for defense. Seven senior attorneys—Xu Ying, Nie Sufang, Zhu Yalin, Yan Huainan, Li Wei, Li Mingzhen, and Li Xiaoxi—delivered presentations in succession, with numerous legal professionals and corporate representatives participating both online and in person.
The event was moderated by Attorney Chen Sainan of King&Capital Law Firm
In her opening remarks, Attorney Chen Sainan noted that comprehensive regulation in the financial sector has been fully implemented, and the criminal legal risks faced by financial institutions are rising significantly. Criminal defense and compliance measures have become essential for the survival of these enterprises. Against this backdrop, the professional value of criminal defense and compliance has become increasingly prominent. What enterprises need is not a gambler’s mentality, but a professional line of defense against risk; what lawyers provide is not merely damage control after the fact, but systematic solutions for early warning and real-time response.
Attorney Xu Ying
“Reflections on the Forms of Complicity in the Crime of Illegal Lending”
Attorney Xu Ying, Senior Partner at King&Capital Law Firm and Director of the Research Center for Corporate Crime Defense and Prevention, kicked off the event with a presentation titled “Reflections on the Forms of Complicity in the Crime of Illegal Loan Issuance.”
Starting with a case involving a rural bank in Henan Province in which she had participated, Attorney Xu Ying conducted an in-depth analysis of the complex relationship between the crime of illegal loan issuance and the crime of loan fraud. She pointed out that, as an “unspecified offense” under criminal law, the crime of illegal loan issuance involves multiple areas of ambiguity in practice, including the determination of the scope of personnel involved, the definition of acts that “violate state regulations,” the assessment of direct economic losses, the scope of related parties, and the determination of corporate criminal liability. These points of contention in theory and practice precisely constitute significant opportunities for criminal defense. Regarding the determination of joint criminal liability among loan applicants, lenders, and third parties such as financial intermediaries in cases of conspiracy, Attorney Xu Ying provided a systematic analysis from three perspectives.
She explicitly stated that where a borrower colludes with a bank employee, the borrower should be independently charged with the crime of loan fraud, rather than as an accomplice to the crime of illegally granting loans; if non-position-specific offenders were classified as accomplices to a serious crime based solely on a common intent, the crime of loan fraud would be effectively rendered meaningless. Regarding third parties, she proposed two evaluation criteria—“intentional conduct” and “source of benefit”—providing a clear analytical framework for determining the applicable charges for roles such as financial intermediaries and brokers. Additionally, Attorney Xu Ying specifically noted that in distinguishing between corporate and individual crimes, a corporate decision-making process does not equate to corporate conduct, and a formal review by the judicial committee does not necessarily imply the establishment of corporate intent; this perspective offers important insights for defense strategies in relevant cases.
Attorney Nie Sufang
“Approaches to Determining the Intent to Illegally Appropriate Property and Controversial Issues in Financial Fraud Crimes”
Attorney Nie Sufang, Senior Partner at King&Capital Law Firm and Director of the Research Center for Defense in Fraud Crimes, shared insights on “Approaches to Determining the Intent to Illegally Appropriate Property and Controversial Issues in Financial Fraud Crimes.”
Attorney Nie Sufang covered several key areas, including the fundamental meaning of “intent to unlawfully appropriate” in fraud offenses, the distinctions in presumption rules for different types of financial fraud crimes, methods for determining intent to unlawfully appropriate, pathways of proof, analysis of specific elements, and the four major points of contention regarding the determination of intent to unlawfully appropriate. Attorney Nie Sufang first cited the views of Professor Zhang Mingkai from his work *Theory of Fraud Crimes* to define the fundamental meaning of “intent to unlawfully appropriate,” which encompasses two dimensions: “intent to exclude” and “intent to exploit.”
Building on this foundation, she systematically reviewed the eight specific financial fraud offenses outlined in Section 5 of Chapter 3 of the Criminal Law. Based on the behavioral patterns of these eight offenses and the methods for determining the intent to unlawfully appropriate, she classified financial fraud crimes into “cash-out type financial fraud” and “redemption type financial fraud,” and analyzed the commonalities and differences in establishing the intent to unlawfully appropriate for these two categories. Furthermore, drawing on relevant judicial interpretations and case law, Attorney Nie Sufang provided a detailed analysis of the rules and specific elements for determining the intent to unlawfully appropriate in “cash-out type financial fraud offenses.” In particular, she shared her insights on how to accurately determine whether a perpetrator possesses the intent to unlawfully appropriate in fraud cases—which are more complex and contentious in practice—where the perpetrator demonstrates a willingness to repay (or an unclear attitude toward repayment) but lacks the ability to do so. Attorney Nie Sufang proposed that, for such cases, the principle of consistency between subjective intent and objective conduct should be followed. Specifically, the timeframe during which the perpetrator lacked the ability to repay and the specific reasons for this should be examined, and a comprehensive analysis and judgment should be made in light of the objective circumstances at each stage; one cannot simply infer the perpetrator’s intent to illegally appropriate property based on the outcome of non-repayment.
Finally, Attorney Nie Sufang discussed four major points of contention regarding the determination of intent to unlawfully appropriate with the audience. She argued that intent to unlawfully appropriate should not encompass indirect intent, that it must arise prior to or concurrently with the fraudulent act, and that the burden of proof and standard of proof for rebutting facts in the presumption of intent to unlawfully appropriate should be determined comprehensively based on the clarity of the rebutting facts and the defendant’s ability to obtain evidence. Drawing on theory, legal norms, and practical experience, Attorney Nie Sufang shared her insights with colleagues both online and offline regarding the determination of intent to unlawfully appropriate in financial fraud crimes, and, building on this, highlighted the value and significance of defense work in such cases.
Attorney Zhu Yalin
“Evidence Review and Rebuttal of the ‘Knowledge’ Element in Money Laundering Offenses: A Return from Objective Incrimination to Subjective Defense”
Attorney Zhu Yalin, Senior Partner at King&Capital Law Firm and Deputy Director of the Research Center for Corporate Crime Defense and Prevention, delivered a presentation titled “Evidence Review and Rebuttal of Presumptions Regarding the Element of ‘Knowingly’ in Money Laundering Offenses: A Return from Objective Attribution to Subjective Defense.”
Attorney Zhu Yalin captured the audience’s attention with a set of starkly contrasting statistics: Since the implementation of the “Amendment XI to the Criminal Law of the People’s Republic of China,” the annual average increase in the number of individuals indicted for money laundering has exceeded 40 percent, yet acquittals have been virtually nonexistent. She conducted an in-depth analysis of the underlying causes behind this phenomenon, pointing out a widespread tendency in judicial practice to use “summary tables of anomalous circumstances” as a substitute for direct evidence to prove “knowledge.” This practice—which equates presumption with legal fiction—essentially renders the subjective element meaningless, turning “knowledge” into a subjective assessment that requires no proof. Attorney Zhu Yalin emphasized that although the Criminal Law Amendment removed the explicit wording “knowing,” the requirement for subjective knowledge has not disappeared; the 2024 judicial interpretation issued by the Supreme People’s Court and the Supreme People’s Procuratorate explicitly requires that, for a money laundering offense, it must be proven that the perpetrator “knew or should have known” that the funds were proceeds or profits from the seven categories of upstream crimes, and that there is a fundamental difference in the standard of proof between “should have known” and “clearly knew.”
Faced with this practical dilemma, Attorney Zhu Yalin proposed a defense strategy of “Three Returns”: returning from the judicial interpretation that removed the phrase “knowing” to the evidentiary essence of subjective culpability; returning from passively accepting presumptive conclusions to actively scrutinizing the underlying facts; and returning from a passive defense of denying “knowing” to constructing a proactive system of evidence to demonstrate “not knowing.” She analyzed seven common anomalous scenarios in judicial practice one by one, pointing out that “anomalies do not equate to a crime; suspicion does not equate to ‘knowing’; ‘may have known’ does not equate to ‘ought to have known’; and ‘ought to have known’ certainly does not equate to ‘definitely knew.’” She repeatedly emphasized that a presumption is merely a method of proof rather than a shift in the burden of proof; the prosecution’s burden of proving the subjective elements does not disappear merely because a presumption exists. When the underlying facts are undermined, rules of thumb are invalidated, or rebuttal evidence is upheld, the presumption must collapse.
Attorney Yan Huainan
Key Points for Determining the Crime of Illegal Lending
Attorney Yan Huainan, Senior Partner at King&Capital Law Firm and Deputy Director of the Research Center for Corporate Crime Defense and Prevention, delivered a presentation titled “Key Points for Determining the Crime of Illegal Lending.”
Attorney Yan Huainan began by addressing the fundamental question of whether “loan losses can directly imply illegal lending,” clearly stating that the answer is no. He noted that loan losses result from multiple causes leading to a single outcome; factors such as business failure, industry cycle fluctuations, market price volatility, depreciation of collateral, enforcement actions by other creditors, and the bank’s subsequent failure to collect effectively may all lead to losses. Under no circumstances should one adopt the simplistic reverse logic of “loan delinquency—bank loss—officer’s guilt.”
Attorney Yan Huainan proposed “four thresholds” for reviewing the crime of illegal loan issuance: The first threshold is defining the boundaries of the crime. “Violation of state regulations” in the context of criminal law cannot be equated with internal bank operating procedures or departmental rules; only conduct that violates core statutory review obligations and has a substantive impact on the loan issuance may fall within the scope of criminal evaluation; The second threshold is to focus on the facts of the loan. For loans backed by genuine and sufficient collateral, the statutory review should prioritize the authenticity, legality, and marketability of the collateral, rather than mechanically elevating matters such as proof of income or work experience to the same level of statutory review obligations; The third threshold involves verifying the actual loss outcome. A bank’s statement of losses constitutes a unilateral assertion; it must be examined to determine whether all available remedies—such as litigation and enforcement, disposition of collateral, and recourse against guarantors—have been exhausted; The fourth threshold is the delineation of individual liability. Collective approval does not equate to joint liability; what truly determines liability is not the presence or absence of a signature, but whether the individual was aware of the fraud, participated in it, possessed actual decision-making authority, and whether there is a causal relationship between their actions and the resulting losses.
He also specifically cautioned that “instructions from superiors” do not constitute grounds for exemption from liability, and a conviction for loan fraud does not automatically imply that bank employees are guilty of the crime of illegally issuing loans; the two charges must be examined separately and independently.
Attorney Li Wei
“Defense Strategies and Practical Determinations in Cases of Illegal Business Operations Involving the Diversion of Public Funds to Private Use”
Attorney Li Wei, a partner at King&Capital Law Firm and Deputy Secretary-General of the Research Center for Corporate Crime Defense and Prevention, shared insights on “Defense Strategies and Practical Determinations in Cases of Illegal Business Operations Involving the Diversion of Public Funds to Private Use.”
Drawing on his experience handling numerous cases in the Beijing area, Attorney Li Wei systematically outlined the logic behind the charges and key defense strategies in “public-to-private” cases. He pointed out that legitimate “public-to-private” transfers include the disbursement of salaries and reimbursement of travel expenses; however, when enterprises divert public funds through channels such as labor service companies or flexible employment platforms to evade taxes or embezzle funds, they may be in violation of the crime of illegal business operations. Attorney Li Wei emphasized the distinction between three key roles in such cases: organizers and operators (the actual controllers of labor service companies), intermediaries (financial and tax advisors, bookkeepers), and those seeking funds.
Regarding defense strategies, he proposed three core approaches: For intermediaries who merely facilitate information exchanges, do not control the flow of funds, and passively receive fixed commissions, it can be argued that they constitute accomplices or that their involvement is minor; the determination of subjective intent should examine the actor’s level of understanding of the business model, degree of involvement in the business chain, methods and nature of profit, and professional knowledge; the amount involved in the case should be precisely allocated based on the duration of participation, the clients connected, and the specific business operations, and the total transaction volume cannot be used to directly determine an individual’s criminal amount. He specifically cautioned that illicit gains are not equivalent to business turnover; the return of ill-gotten gains and compensation should be carried out only after the amounts have been clearly verified, and the imposition of fines is directly related to the precise determination of illicit gains.
Attorney Li Mingzhen
“Assessment and Prevention of Criminal Risks in Payment Channel-Based Loan Facilitation Services from a ‘Look-Through’ Review Perspective”
Attorney Li Mingzhen, of King&Capital Law Firm and Deputy Secretary-General of the Research Center for Corporate Crime Defense and Prevention, delivered a presentation titled “Identification and Prevention of Criminal Risks in Payment Channel-Based Loan Facilitation Services from the Perspective of Penetrative Review.”
Starting with a real-life case involving payment channel-based loan facilitation, Attorney Li Mingzhen reconstructed the complete capital chain: “demand side—organizing side—contracting side—lending side—fund flow side.” She pointed out that, against the backdrop of penetrative supervision becoming the norm, judicial authorities review loan facilitation businesses based on the principle of “substance over form.” The diversion of funds between nominal borrowers, shell companies, and actual fund users may violate three “red lines”: controls on the use of credit funds, market access controls, and account and anti-money laundering monitoring.
Regarding the determination of the crime of illegal business operations, she proposed a systematic logic for exoneration: the core characteristics of the payment and settlement-type crime of illegal business operations lie in its “commercial nature” and “intermediary nature,” requiring the continuous provision of settlement services to unspecified parties and the accumulation and pooling of funds within accounts. If the perpetrator merely provides a one-way fund channel, there is no pooling of funds in the account, no profit is earned from settlement spreads, and no fund mismatching occurs, then the elements of the crime of illegal business operations are not met. Regarding the distinction between criminal charges, she also conducted an in-depth analysis of the concurrence and differentiation among multiple offenses, including the crime of obtaining loans by fraud, the crime of loan fraud, the crime of usurious lending, the crime of aiding and abetting Xingye Bank, and the crime of money laundering. Furthermore, she examined the allocation of liability between nominal borrowers and actual borrowers from the perspective of the intersection between criminal and civil law.
Finally, she offered practical compliance recommendations for loan facilitation agencies, individuals lending their accounts in name only, and financial institutions, emphasizing that the only reliable path to compliance is to “exit the channel and return to authenticity.”
Attorney Li Xiaoxi
The Evolution of Financial “Gray and Black” Industries and the Comprehensive Landscape of Criminal Regulation
Attorney Li Xiaoxi of King&Capital Law Firm took the stage last to deliver a presentation titled “Typological Analysis of Financial ‘Gray and Black’ Industries and Criminal Regulation.” Having previously worked in the credit approval department of a major state-owned commercial bank, he possesses both practical experience in financial institutions and a professional legal background.
Starting from the broader context of the “15th Five-Year Plan” period, Attorney Li Xiaoxi pointed out that financial security is an integral part of national security. The launch of the three-year “comprehensive campaign to prevent and combat illegal financial activities” signifies that defense in financial crime cases is poised to become a major growth area in the legal profession. He vividly divided the evolution of the financial “gray and black” industries into three phases: the 1.0 era, dominated by the resale of treasury bonds and foreign exchange; the 2.0 era, characterized by illegal fundraising and credit card cash advances; and the 3.0 era, which has seen the emergence of more complex, sophisticated, and covert forms such as debt collection resistance, credit report repair, insurance policy cancellation services, loan packaging, “AB loans,” and professional debtors.
Attorney Li Xiaoxi focused on analyzing the behavioral patterns and criminal regulatory approaches for several currently prevalent types of financial gray and black markets. He specifically pointed out that “AB loans” (stand-in loans)—the most covert and harmful form of illegal lending—involve three parties: intermediaries, actual borrowers, and nominal borrowers, and are highly prone to triggering criminal risks such as contract fraud and loan fraud. He also offered insights from both the perspectives of bank risk control and criminal defense, noting that a borrower who provides genuine and sufficient collateral—even if some loan documentation is partially fabricated—can present a significant defense against charges of loan fraud. Furthermore, he emphasized that while the value of collateral may fluctuate with market conditions, a subsequent depreciation must never be used to retroactively infer that the borrower had the intent to defraud at the time the loan was taken out. This perspective provides highly practical guidance for defending against charges of loan fraud.
This forum was a high-caliber, intensive, and highly practical professional event that fully demonstrated the profound expertise and forward-looking strategy of King&Capital Law Firm and its two research centers in the field of financial crime defense and prevention. King&Capital Law Firm will continue to uphold the philosophy of “pursuing excellence and living up to the trust placed in us.” Together with colleagues from all sectors, we will build robust legal risk defenses for enterprises, safeguard the healthy development of the financial industry, and contribute our professional expertise to the era’s mission of preventing and defusing major financial risks and maintaining national financial security.
