Compliance Risk Management in Argentina: A Growing Concern
As the new administration in Argentina focuses on deregulation and attracting foreign investment, compliance risks and corporate liability are becoming increasingly important concerns.
The Current State of Compliance Risks
Despite initial decisions to deregulate certain sectors, the legal framework for anti-bribery, anti-money laundering, and compliance has not changed significantly. However, recent court decisions have begun to shape a local jurisprudence on compliance and corporate liability for corruption and money laundering.
Key Developments
- Reinforcement of the message that money laundering can lead to corporate criminal punishment even when the company is not subject to the proceeding
- Upholding leniency agreements for cooperating defendants against constitutional challenges
- Emphasis on the importance of internal whistleblower mechanisms and corporate investigations
Administrative Regulations and Compliance Practices
Administrative regulations have contributed to the adoption of compliance policies and procedures by local businesses, such as requiring compliance programs for certain state contractors and uploading them to a state-run compliance registry. However, substantive compliance practices and corporate investigations in Argentina have been mainly driven by legal risks derived from the transnational enforcement of foreign laws or market incentives.
Compliance Barriers
- Over 14 multinational companies were subjected to FCPA enforcement actions for bribery or books and records infringements by their Argentine businesses
- This has raised the compliance bar for “globalized” market players, strengthening private-to-private compliance requirements to operate in Argentina
Expanding Compliance Concerns
Compliance concerns have expanded remarkably not only for financial institutions but also for investors, business partners, and auditors. This has triggered a varied and challenging array of proceedings aimed at identifying, investigating, remedying or compensating past compliance-risky behavior.
Growing Areas of Concern
- Cyberfraud: victim companies need to conduct forensic investigations and determine whether an insider was involved in the fraudulent scheme
- ESG (Environmental, Social, and Governance): concerns around gender-based discrimination, workplace mistreatment, and modern slavery are driving internal investigations work
Update on AML/CTF Regime and OECD Accession
Argentina is updating its AML/CTF regime to comply with FATF recommendations and avoid downgrading to the “grey list” in the upcoming 2024 evaluation. The country has also committed to deepening efforts to access the OECD.
Expected Changes
- Adoption of a new offence of mass destruction weapons proliferation
- Creation of a beneficial ownership registry
- Expansion of the list of gatekeepers to include lawyers acting on behalf of clients in certain transactions and virtual assets service providers (VASPs)
Conclusion
As the administration in Argentina continues to focus on market-friendly reforms, compliance needs will naturally increase. The country’s efforts to strengthen its legal and institutional framework towards stronger enforcement and organizational compliance practices in the private sector are aligned with its commitment to deepening OECD accession.