Criminal Penalty

Criminal Penalty in foreign trade refers to penalties imposed by judicial authorities on natural or legal persons for violating import/export laws and regulations (such as smuggling, tax evasion, money laundering, sanctions violations, forged certificates of origin, etc.), including fines, confiscation of property, fixed-term imprisonment, or even life imprisonment. It is commonly encountered in compliance risks such as customs audits, export controls, anti-commercial bribery, and anti-money laundering. Unlike administrative penalties (e.g., fines, license revocation), criminal penalties are punitive and deterrent, leave a criminal record, and severely affect corporate credit, import/export qualifications, and the personal freedom of executives. Foreign trade practitioners should note: the same conduct may be characterized differently across jurisdictions (e.g., U.S. long-arm jurisdiction), and criminal penalties may trigger compliance clauses, force majeure, or termination clauses in contracts. It is advisable to clearly stipulate compliance obligations, sanctions exemptions, and dispute resolution methods in contracts, and to establish an internal compliance system to reduce risks.