January 12, 2018

Criminal Liability of Corporations in Mexico and the Need to Comply with the National Code of Criminal Procedures

By Sandra Campillo

Criminal Liability of Corporations in Mexico and the Need to Comply with the National Code of Criminal Procedures

In recent years, due to the growing development of the international economy and markets, technological innovations and corruption, the number of cases in which crimes are committed in the corporate and business context by organized criminal groups and not by individuals have increased. Such acts committed by criminal groups include those committed by Mexican entities, such as corporations, which can be structured in a complex manner in order to perpetrate various illicit acts.  Such illegal acts include money laundering, urban development crimes, environmental crimes and economic crimes, among others.

In Mexico, prior to the publication in 2015 of the National Code of Criminal Procedures, companies could not commit crimes and, consequently, not be held criminally liable. Now, with the implementation of the new Code, entities may be held criminally liable for the following crimes: a) crimes that are committed by their representatives and/or executives, when such criminal conduct is carried out in relation to corporate activities, for profit or to exclusively benefit the company; or b) crimes committed by employees, when companies have been negligent in their oversight duties.

The main objective of the new Code providing for criminal liability of corporations in Mexico is to sanction those companies that have deficiencies in their organizational operations and structure, which could enable them to commit crimes.

The above has led to the need for corporations to adopt programs and policies in the areas of corporate governance or criminal compliance. In essence, companies should establish criminal compliance programs that feature training, internal protocols and rules. This will allow such companies to formalize their organizational structure and policies to prevent criminal liability and potential penalties that could impact the company. Under the new law, in order to prevent and mitigate a company’s criminal liability arising out of the commission of a crime by a company executive, representative and/or employee, a company must meet the minimum requirements established in the statute.

In the end, the cost of implementing a criminal compliance program should not be considered as an unnecessary expense. Rather, it is an investment to promote the proper operation and self-regulation of companies. This will serve to ensure good corporate governance and provide the company with a competitive advantage in the face of an increasingly complex market.