Chinese authorities have fined US due diligence firm Mintz Group approximately $1.5 million for allegedly conducting illegal activities related to data gathering. The Beijing Municipal Bureau of Statistics stated that Mintz Group violated the law by conducting 37 projects between March 2019 and July 2022 without obtaining the required licenses for "foreign-related statistics and surveys." The bureau did not provide further details on the specific nature of Mintz Group's activities. Mintz Group has yet to respond to the fine.
This recent move by Chinese authorities is part of a broader trend of heightened scrutiny over data privacy and national security in China. Mintz Group is not the first global company providing due diligence services in China to face investigation. In 2014, two foreign investigators were accused of illegally obtaining personal information about Chinese citizens.
In March of this year, Mintz Group's offices in Beijing were raided, and five of its Chinese employees were detained. At the time, China's foreign ministry stated that the company was suspected of engaging in illegal business operations. It is worth noting that Randy Phillips, the former chief representative of the CIA in China, was affiliated with Mintz Group.
Chinese authorities have been cracking down on consulting firms in recent months, as part of a nationwide anti-espionage campaign. One consulting company was accused of leaking state secrets and having ties with foreign intelligence agencies. In April, consulting firm Bain & Company confirmed that Chinese authorities had questioned staff at its Shanghai office. The following month, Chinese state security officials visited a branch of Capvision, a consulting firm with offices in New York and Shanghai.
In a separate development, Beijing is intensifying its efforts to uncover alleged spies for the US. The Chinese Ministry of State Security announced on Monday that it is investigating a 39-year-old ministry official, identified as Hao, for providing information to the CIA in exchange for money. This investigation further highlights the increasing concerns surrounding national security in China.
As China tightens its control over data privacy and national security, foreign companies operating in the country should be prepared for increased scrutiny and ensure compliance with local laws and regulations.