Key Takeaways
- The Department of Justice’s new white collar crime strategy prioritizes enforcement in areas designed to buttress the Administration’s broader national security priorities, particularly related to China.
- Violations of U.S. customs duties and export controls, including those committed prior to 2025, will be a focus of both criminal and False Claims Act enforcement actions. The statute of limitations for these matters has recently doubled, from five to ten years.
- Market integrity will receive renewed law enforcement attention in areas relating to Chinese access to U.S. capital markets, such as Variable Interest Entities.
- Chinese money laundering operations, especially those enabling narcotics trafficking, will find themselves in the crosshairs of DOJ white collar prosecutors.
On May 12, 2025, Matthew Galeotti, Head of the Department of Justice’s (DOJ) Criminal Division, unveiled a comprehensive white collar enforcement strategy titled “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime” (“the Strategy”).[1] The Strategy reflects a significant realignment of the Criminal Division’s priorities, where white collar enforcement will be designed to further policy goals related to national security, trade and market integrity that harm U.S. businesses and economic competitiveness.
Several of these initiatives are focused on the Administration’s broader priorities vis-a-vis China.
Analysis
Trade and Customs Fraud, Including Tariff Evasion
Given the Administration’s heavy focus on tariffs, particularly involving Chinese imports, it is unsurprising that criminal enforcement in this area is listed as a key white collar priority. Undervaluing, misclassifying and transshipping goods are common evasion techniques that DOJ investigations will focus on, and there are a variety of statutes that allow for prosecution of a company and its executives. The Strategy’s focus on this area parallels the DOJ’s stated intention to aggressively use the False Claims Act (FCA) to impose civil penalties for tariff evasion where criminal prosecution is not appropriate or viable.
While China is not explicitly named as the target of this particular initiative, it is clear that imports from China will receive heightened scrutiny. In addition to the tariffs implemented by the Administration, the statute of limitations has been extended from five years to ten years on tariff evasion violations committed after April 2019. Enforcement related to prior years’ tariff evasion is a potentially attractive strategy for DOJ, both recouping lost revenue and providing a powerful general deterrent as new tariffs go into effect.
Sanctions and Export Control Enforcement
The Strategy makes several pointed references to sanctions and export control enforcement, noting that combating these activities is essential to neutralizing a variety of national security threats. The Strategy notes that sanctions evasion and related activity are a “threat to the U.S. financial system” and highlights “[f]inancial institutions, shadow bankers, and other intermediaries” that work in concert with “corrupt companies and foreign officials” to process financial transactions to evade sanctions. The Strategy notes sanctions evasion is one of a few key areas where the use of digital assets will receive increased attention from law enforcement.
This is the latest in a government-wide push to step up enforcement of sanctions and export control offenses. While China is not specifically mentioned, the Strategy comes on the heels of several pronouncements by key senior officials involved in sanctions and export controls enforcement. For example, at the Bureau of Industry and Security (BIS) annual Update Conference on Export Controls and Policy, held in late March, U.S. Department of Commerce Secretary Howard Lutnick spoke at length about increased export control enforcement with a focus on China. This is significant given BIS’ dual regulatory and criminal enforcement role, as it frequently works with DOJ and other law enforcement agencies in investigating and prosecuting sanctions and export control cases.
The focus on “shadow banking” and financial institutions is also significant, since the October 9, 2024 BIS best practices guidance[2] to banks remains in effect. The attendant changes to DOJ’s whistleblower policy also prioritize reporting “corporate sanctions offenses.”
Fraud Involving Variable Interest Entities (VIEs)
The Strategy singles out fraud involving VIEs and tracks the National Security Presidential Memorandum/NSPM-3 (“the America First Investment Policy”), which emphasizes the importance of investor protection against fraudulent practices connected to certain “foreign adversary” companies listed on U.S. exchanges. The Strategy goes a step further, specifically mentioning “Chinese-affiliated companies listed on U.S. exchanges that carry significant risks to the investing public.”
Chinese companies use VIEs to bypass Chinese regulations that restrict foreign ownership, allowing them to gain access to capital in the U.S. Nearly all Chinese technology firms are structured as VIEs. As of March 2025, there are about 159 Chinese companies currently listed on the major U.S. stock exchanges using a VIE structure.[3]
The Administration believes that the risk with VIEs is high, as U.S. investors do not own equity in the underlying Chinese business and instead own shares in an offshore holding company that has a contractual claim on the Chinese company’s profits. VIEs have no meaningful oversight from regulators like the U.S. Securities and Exchange Commission (SEC) or the Public Company Accounting Oversight Board (PCAOB), making it easier to overstate revenue, hide liabilities, and engage in related-party or off-the-books activity. In addition to these fraud risks, the Strategy notes that VIEs “facilitate the flow of investor funds into strategic industries in China.”
The Strategy highlights certain types of fraud related to VIEs that the DOJ will prioritize for enforcement, including offering fraud, “ramp and dumps,” elder fraud, securities fraud and other market manipulation schemes.
Money Laundering Facilitating Narcotics Trafficking
Another white collar priority is complex money laundering that enables the manufacturing of illegal drugs, notably fentanyl. The Strategy specifically identifies “Chinese Money Laundering Organizations” which work in concert with Mexican drug cartels to launder the proceeds of fentanyl and other narcotics trafficking.
Conclusion
The Strategy is the latest in a series of Administration policy pronouncements across several different agencies designed to address national security concerns with China. Notably, most of the above areas have previously been handled and supervised out of DOJ’s National Security Division, rather than the Criminal Division, and it remains to be seen how the two entities will interact in practice.
Invariably, many transnational criminal cases involving China and Chinese entities will implicate classified information and require litigation under the Classified Information Procedures Act (CIPA).
Once involved in an investigation by the U.S. government, whether civil or criminal, companies and executives must be mindful of potential criminal charges for false statements under 18 U.S.C. § 1001 and obstruction of justice pursuant to 18 U.S.C. § 1512. These “process crimes” can be independently actionable, even if the underlying investigation does not result in an enforcement proceeding.
[1] See https://www.justice.gov/opa/speech/head-criminal-division-matthew-r-galeotti-delivers-remarks-sifmas-anti-money-laundering; and https://www.justice.gov/criminal/media/1400046/dl?inline
[2] See www.bis.gov/media/documents/guidance-financial-institutions-best-practices-compliance-export-administration.pdf
[3] www.uscc.gov/sites/default/files/2025-03/Chinese_Companies_Listed_on_US_Stock_Exchanges_03_2025.pdf
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