China fines U.S. due diligence firm Mintz Group for $1.5 million

China has fined U.S. firm Mintz Group approximately $1.5 million for conducting “unapproved statistical work,” according to a notice from the Beijing Municipal Bureau of Statistics. The penalty was imposed after Chinese authorities raided Mintz Group’s Beijing office, raising concerns about China’s openness to foreign investment. The bureau stated that Mintz Group had carried out “foreign-related statistical investigations” without obtaining the necessary approvals. The company was found to have conducted 37 such investigations between March 2019 and July 2022.

As a result of the violation, the bureau confiscated around 5.34 million yuan ($1.5 million) of Mintz Group’s “illegal proceeds” and imposed an equivalent administrative penalty. Mintz Group has the option to appeal the ruling within 60 days and file an administrative suit within six months.

Mintz Group provides various services, including background checks on potential business partners and new hires, as well as fact gathering for legal cases and internal investigations. The firm maintains that it is licensed to conduct legitimate business activities in China and has always operated lawfully.

The raid on Mintz Group’s office in March was part of a broader crackdown on consultancy and due diligence firms in China. This crackdown also affected other companies, including Bain & Company’s Shanghai office and Capvision Partners. The intensified regulatory actions have raised concerns among foreign business groups about the impact on investor confidence in China.

China’s regulatory moves align with President Xi Jinping’s emphasis on placing national security at the forefront of the country’s priorities. Beijing recently updated its anti-espionage law, expanding the definition of spying and prohibiting the transfer of information related to national security. Additionally, China has introduced various legal amendments aimed at restricting foreign access to its data and enhancing data security measures.

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