Argentina’s Compliance Risk Assessment Remains Largely Driven by Foreign Laws and Market Incentives Despite President Milei’s Reforms

Introduction

Argentina’s new President, Santiago Milei, has taken the reins of the country’s government machinery, but compliance risks and corporate liability remain largely driven by foreign laws and market incentives rather than domestic criminal or administrative enforcement.

Lack of Strong Enforcement Signs

Despite the lack of strong signs of enforcement by criminal authorities, Argentine courts have recently issued a series of landmark decisions that are shaping the contours of a local jurisprudence in compliance and corporate liability for corruption and money laundering. These decisions include:

• A ruling that money laundering can lead to corporate criminal punishment even when the company was not subject to the proceeding
• Upholding leniency agreements for cooperating defendants against constitutional challenges

Compliance Risks Driven by Foreign Laws

Substantive compliance practices and corporate investigations in Argentina have been mainly driven by legal risks derived from the transnational enforcement of foreign laws, such as:

• The US Foreign Corrupt Practices Act (FCPA)
• Market incentives

More than 14 multinational companies were subjected to FCPA enforcement actions for bribery or books and records infringements by their Argentine businesses.

Compliance Concerns Expand in Scope

Compliance concerns have expanded remarkably in scope and detail, not only for financial institutions but also for:

• Investors
• Business partners
• Auditors

This has triggered a varied and challenging array of proceedings aimed at identifying, investigating, remedying, or compensating past compliance-risky behavior to approve transactions and financial statements.

Market-Driven Compliance Requirements

Market-driven compliance requirements have boosted internal investigations in Argentine subsidiaries of multinational companies and increasingly in family-owned Latin American business groups with access to foreign markets. These instances remain in the private domain and do not create case law for guiding other companies in similar situations.

Impact on Compliance Needs

As Argentina attempts to pass market-friendly reforms directed at attracting direct-foreign investment, including:

• Privatization of state-owned enterprises
• Compliance needs will naturally increase, particularly in historically risky sectors such as:
  • Oil and gas
  • Renewable energy
  • Infrastructure surrounding shale fields
  • Agribusiness

Anti-Money Laundering and Countering the Financing of Terrorism (AML/CTF) Regime Updates

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 committed to deepen its efforts to access the OECD, a development that could further strengthen and deepen the legal and institutional framework towards stronger enforcement as well as organisational compliance practices in the private sector.

Conclusion

While Argentina’s new President Milei has taken initial steps towards deregulation, compliance risks and corporate liability remain largely driven by foreign laws and market incentives rather than domestic criminal or administrative enforcement. As the country continues to navigate its path towards strengthening and deepening its legal and institutional framework, it is likely that compliance needs will only continue to grow, particularly in historically risky sectors.