On September 29, 2026, the Supreme People's Procuratorate and the State Administration of Foreign Exchange published the Guidelines on the Reverse Linkage Between Criminal and Administrative Proceedings in the Foreign Exchange Field. The document contains 18 articles, is dated August 24, and provides that it takes effect on the date of issuance. It does not address how to characterize a particular new type of foreign exchange crime, but rather a long-overlooked issue: after a case exits criminal proceedings due to statutory non-prosecution, discretionary non-prosecution, or non-prosecution for insufficient evidence, whether the conduct may still constitute a foreign exchange administrative violation, and how the case enters administrative penalty proceedings.

This change merits the attention of Chinese enterprises, management personnel, and lawyers now. The risk endpoint of cross-border fund cases can no longer be judged solely by whether prosecution is brought. Once the transfer conditions, use of evidence, cross-jurisdictional jurisdiction, and result feedback between procuratorial organs and foreign exchange administration departments are linked, the original criminal case file may continue to affect administrative liability, handling of illegal gains, bank accounts, and subsequent cross-border business.

I. What non-prosecution resolves and what it does not

A non-prosecution decision resolves whether a particular criminal case continues to be prosecuted under the evidence and legal assessment at that time. It does not automatically mean the conduct is lawful, nor does it automatically extinguish an administrative organ's authority to investigate and impose penalties in accordance with law.

The "reverse linkage" referred to in the Guidelines means that, for a case in which non-prosecution has been decided, where the People's Procuratorate, upon review, considers that the person not prosecuted has violated foreign exchange administration provisions and administrative penalties need to be imposed, it issues a procuratorial opinion and transfers the case to the foreign exchange administration department, while tracking the handling. "Reverse" here is relative to the transfer of suspected criminal cases by administrative law enforcement organs to criminal judicial organs.

However, transfer is not automatic punishment. Article 5 of the Guidelines lists six principled conditions, including that the foreign exchange administration department has jurisdiction, that the subject is qualified, that there is evidence proving a foreign exchange violation, that a basis for administrative penalty exists, that the penalty limitation period has not expired, and that the same conduct has not already been subject to a foreign exchange administrative penalty. After receiving the case, the foreign exchange administration department must still review it in accordance with law and may, depending on the circumstances, decide to impose an administrative penalty, not impose a penalty, or terminate the case; if new evidence of a crime is discovered, it may also transfer the case again to a supervisory organ or a public security organ.

Therefore, the correct understanding is not that "punishment will definitely follow non-prosecution," but that "an independent administrative law determination must still be completed after non-prosecution." This is also the real entry point for enterprise statements and defenses and for lawyers' work.

II. What the new rules change is the manner in which risk is transmitted

In the past, after some cases concluded criminal proceedings, they might remain in institutional gaps due to unclear transfer standards, jurisdiction, evidence conversion, or inter-departmental feedback mechanisms. The Guidelines connect several key nodes into a closed loop.

First, communication precedes transfer. Before issuing a procuratorial opinion, the procuratorate should communicate with the local foreign exchange administration department on jurisdiction, facts of the violation, necessity of penalty, and evidence conversion. For situations where the jurisdiction of the criminal case is inconsistent with the place where the foreign exchange violation occurred, procedures for designated jurisdiction and cross-level and cross-regional consultation are also established.

Second, the case file may continue to circulate. When transferring the case, in addition to the Procuratorial Opinion, the procuratorate should also transfer the non-prosecution decision, evidence and a list proving the facts of the foreign exchange violation and affecting the penalty discretion, the notice of cooperation with administrative law enforcement, and other materials. Physical evidence, documentary evidence, audio-visual materials, and electronic data lawfully collected in criminal proceedings may be used as evidence in administrative penalties; testimonial evidence should be comprehensively assessed together with other evidence.

Third, results must be fed back. Within 90 days from the date of receiving the Procuratorial Opinion, the foreign exchange administration department should reply in writing to the procuratorate on the handling result or the status of handling. The procuratorate continues to track the matter; where illegal circumstances such as failure to reply, failure to open a case, or failure to impose a penalty without justified reasons occur, it may urge correction in accordance with law.

These three points mean that a chat record, a set of bank statements, the on-chain records of a virtual currency wallet, or a set of import and export documents will not cease to be relevant merely because the criminal case has concluded. They may be recombined in different proceedings to serve different evidentiary standards and elements of liability.

III. Enterprises Cannot Review Cross-Border Funds Solely by Asking Whether Conduct Is Criminalized

Foreign exchange risk often arises from the transaction structure rather than from a single payment voucher. Common scenarios include completing RMB-foreign currency exchange through underground banks or cross-border offsetting, using virtual currency as a medium of value transfer, splitting funds under the guise of trade, services, investment or loans, collecting and paying on behalf of domestic and overseas affiliated entities, and inconsistencies between the declared purpose and the actual purpose.

These arrangements may simultaneously involve five levels:

  1. Transaction level: whether there is a genuine relationship involving goods, services, equity, debt or profit distribution;
  2. Fund level: from whose accounts RMB and foreign currency respectively enter, through which intermediaries they pass, and who ultimately controls them;
  3. Foreign exchange level: whether settlement and sale of foreign exchange, cross-border receipts and payments, and declarations have a genuine and lawful basis, and whether they involve evasion of foreign exchange, fraudulent purchase of foreign exchange or illegal trading in foreign exchange;
  4. Criminal level: whether the conduct meets the constituent elements and prosecution thresholds of the corresponding crime, and how subjective knowledge is to be proven;
  5. Administrative layer: even if no crime is constituted, whether there nonetheless exist punishable foreign exchange violations, illegal gains, and discretionary circumstances.

If an enterprise organizes its materials solely around "the amount does not meet the criminal threshold" or "there was no criminal intent," it may fail to answer the questions that administrative proceedings focus on more: who carried out the specific currency exchange or fund transfer, why the transaction and the declaration are inconsistent, what benefit the enterprise obtained therefrom, how long the unlawful state persisted, and whether it voluntarily corrected the situation.

IV. The evidence chain should expand from "proving innocence" to "reconstructing the transaction"

In the face of reverse linkage, the most effective materials are not isolated favorable documents but a set of factual working papers capable of reconstructing the full life cycle of the funds.

An enterprise may organize them along five lines: "entity—transaction—funds—declaration—decision." The entity line explains the contracting party, payer, payee, beneficial owner, and actual control relationships; the transaction line preserves contract versions, pricing basis, performance results, logistics, and invoices; the funds line corresponds to domestic and overseas accounts, third-party payments on behalf, exchanges, and final use; the declaration line cross-checks bank remittance remarks, foreign exchange declarations, customs declarations, and tax treatment; the decision line retains board or management approvals, compliance consultations, anomaly discoveries, and rectification records.

Electronic data in particular must be kept in its original form. Chat records should retain complete context, account identity, and export method; on-chain transactions should connect address control, transaction hashes, exchange accounts, and fiat currency on-ramps and off-ramps; bank statements should correspond transaction by transaction with contracts, invoices, logistics, and accounting entries. Submitting only screenshots without being able to explain their source, or supplementing, backdating, or rewriting the transaction narrative after an investigation, often creates new credibility problems.

At the same time, the usability of criminal evidence in administrative proceedings must be examined separately. Physical evidence, documentary evidence, audio-visual materials, and electronic data are not necessarily sufficient merely because they "can be converted"; the acquisition procedure, authenticity, relevance, and object of proof must still be verified. Verbal evidence, in particular, cannot be understood in isolation from objective materials. An enterprise may submit specific opinions on the facts of the violation, the responsible entity, the limitation period for penalties, duplicate penalties, and discretionary factors.

V. After receiving a non-prosecution decision, four things should be done immediately

First, read all legal documents, not just the words "non-prosecution." The reasons for non-prosecution, the facts found, the handling of the funds involved, and whether a notice to cooperate with administrative enforcement has been received will directly affect the assessment of the next stage. The factual bases for statutory non-prosecution, non-prosecution for insufficient evidence, and discretionary non-prosecution are not the same.

Second, establish a checklist of administrative liability issues. Against Article 5 of the Guidelines, verify item by item the jurisdiction, the entity, the facts of the foreign exchange violation, the basis for the penalty, the limitation period for pursuing liability, and the prior penalty history; at the same time, identify whether there are grounds for not imposing a penalty, for a lighter or mitigated penalty, disputes over the calculation of illegal gains, or grounds for termination of the case.

Third, freeze the factual versions and preserve the original data. Establish an index of the materials already submitted to the criminal authorities, indicating the source, the time of creation, the purpose of proof, and possible disputes. Without verification, do not have different departments separately produce mutually conflicting statements, and do not delete chats, transfer wallet assets, or fabricate documents after the fact.

Fourth, separate remediation from defense. Stopping high-risk channels, improving payment approval, and strengthening review of third-party collection and payment and virtual asset transactions are governance measures; whether to admit the violation and how to explain the subjective state and the illegal gains are legal judgments in the proceedings. Remediation should not evolve into a blanket admission without review, and a defense should not impede the timely cessation of risk.

VI. Legal services also need to shift from a single proceeding to dual-track management

Under the new rules, criminal defense and foreign exchange administrative compliance cannot be handed over only at the end of a case. Factual statements made at the criminal stage will enter the administrative file, and administrative remediation materials may also affect the assessment of the nature of the conduct and the subjective state. A more prudent approach is to establish the same factual record from the outset, and then separately produce four analytical tables: criminal liability, administrative liability, asset disposition, and business impact.

For corporate management, the focus of decision-making is not only on securing a particular procedural outcome, but also on whether accounts and banking relationships can be maintained, whether cross-border payments need to be adjusted, how to communicate with overseas counterparties, how to calculate illegal gains and the occupation of funds, and whether the same transaction model is still being operated by other entities.

The real signal of the Guidelines is that foreign exchange governance is shifting from isolated penalties to a cross-departmental, traceable procedural closed loop. Enterprises should "use old finance to explain new transactions": whether the channel is a bank, an underground bank, a payment platform, or virtual currency, regulators will ultimately still ask about the substance of the transaction, the source and use of funds, the control relationships, and the consistency of the evidence. Technology can change the path of funds, but it cannot eliminate legal identity.

Conclusion

Non-prosecution is of course an important outcome in criminal proceedings, but it should not be misread as a final confirmation of all foreign exchange compliance issues. Reverse linkage continues to send the facts and evidence formed in criminal justice into administrative enforcement, and also leaves enterprises room for independent review of jurisdiction, elements, evidence, limitation periods, and discretion.

For enterprises that regularly carry out cross-border receipts and payments, overseas investment and financing, related-party transactions, or virtual asset arrangements, the most important prevention is not to wait for a case to arise and then look for an explanation, but to make the contract, performance, filings, accounts, and accounting records jointly tell the same true story at the time the transaction is designed.

Principal References

The information in this article was verified as of September 30, 2026. This article is provided solely for general information sharing and does not constitute legal, tax, foreign exchange or criminal defense advice on any specific matter. Specific liability and procedures should be determined on a case-by-case basis in light of the time of the conduct, the facts of the transaction, the status of the evidence and the rules in effect at the relevant time.