China’s new Anti-Terrorism Law (“ATL”), which came into effect on January 1, 2016, gives sweeping powers to government authorities to pursue and combat the threat of terrorism. Under the ATL, a national counter-terrorism body is established and charged with identifying terrorists and terrorist threats. A national intelligence center coordinates departmental and trans-regional efforts to gather intelligence.

These agencies are granted broad and controversial powers to collect information, undertake surveillance and conduct investigations on companies operating across a wide-range of sectors and industries in China including telecommunications, internet and technology, banking and finance, transportation and logistics, hotels and hospitality, aviation, motor vehicle leasing, and handlers of hazardous chemicals or controlled instruments.

What is “terrorism”?

Article 3 of the ATL defines “terrorism” as any activity or proposition that (i) by means of violence, sabotage or threat (ii) generates social panic, undermines public security, infringes upon personal and property rights, or menaces state authorities and international organizations (iii) with the aim of realizing a political, ideological, or other purpose. “Terrorism” is therefore a broad concept which need not involve any threat of danger to human life but may comprise any activity promoting a political or ideological agenda which is deemed to be a threat to public or private interests. Critics of the  ATL fear that some of these discretionary powers may be used to oppress dissidents and ethnic minorities in China.

Obligations under the ATL

Under the ATL companies and individuals are obliged to cooperate with a government investigation and provide information, access, and support as necessary. Specifically, telecommunications and internet service providers are required to provide decryption services and other technical support and assistance for both the prevention and investigation of terrorist activities. Such companies are also prohibited from disseminating information with any terrorist or extremist content.

Failure to comply with these obligations may result in fines of up to CNY 500,000 being imposed on the company and/or responsible employees. Individuals also risk being detained for a period of up to 15 days, depending on the seriousness of the violation. Other stipulations under the ATL require that mandatory identity checks are conducted on customers, users and vendors by financial institutions and other companies, such as long-distance passenger businesses, motor vehicle leasing companies and internet companies.

What can a company do?

While the authorities have broad powers to conduct an investigation, companies should understand the scope of any investigation and be alert to how company information and materials are handled and processed. Information and materials gathered in the context of an anti-terrorism investigation may only be used for the purposes of that investigation and not for any other purpose. Government bodies handling that information must keep confidential any state secrets, trade secrets and personal privacy matters. Anyone who divulges state secrets, trade secrets, or personal privacy matters in violation of applicable PRC law may be liable for an offense.

Companies operating in China, and telecommunications and internet service providers in particular, would be wise to ensure they are familiar with the scope of the powers granted by the ATL and to ensure relevant company procedures are implemented in order to comply with their obligations under the law, and are sufficiently prepared in case they are requested to provide assistance to a government investigation.