Financial Crime World

Title: New Bolivian Penal Code Proposes Corporate Criminal Liability for Financial Crimes and Other Offenses

The Bolivian legislature is currently debating a proposed reform to the Penal Code of 1972, which includes the implementation of corporate criminal liability for the first time. This reform comes with numerous changes, as outlined below.

Under the current Bolivian law, except for one specific law, corporate entities do not face criminal liability. The Law on the Fight against Corruption, Illicit Enrichment and the Investigation of Wealth (Law 004) from 2010 is the exception, which states that corporations can be held liable for the crime of illicit enrichment that affects State patrimony with a potential fine of up to 25 percent of their corporate assets. In other cases, only the natural person legal representative of a corporate entity can face criminal charges for crimes committed on its behalf.

Proposed Expansion of Corporate Criminal Liability

The new regulation extends the scope of criminal liability for corporations, allowing them to potentially be held accountable for the following offenses:

  1. Human, organ and animal trafficking
  2. Environmental crimes
  3. Tax evasion
  4. Labor-related offenses, such as unlawful pension fund misappropriation and unfair labor practices
  5. Money laundering
  6. Fraud
  7. Conflicts of interest
  8. Financial crimes, such as unlicensed financial intermediation and misuse of influence for credit access
  9. Breach of state contracts
  10. Bribery of public officials

Criteria for Corporate Liability

Corporate entities would be subject to criminal liability under the new law if they have “benefited or been used as instruments to carry out criminal offenses.” This includes those with decision-making authority acting on the entity’s behalf, and the actions of subordinate staff that are ratified or condoned by the company.

Separation of Corporate and Individual Liability

The draft law sets forth the separation of corporate and individual liability, with the following considerations:

  • A corporation can be held liable regardless of the:

    • Failure to prosecute a natural person corporate employee or agent
    • Expiration of the statute of limitations for the natural person offender
    • Inability of the State to identify the responsible individual
    • Mitigating factors favoring the natural person offender
    • Changes in corporate ownership or organization, such as mergers, acquisitions, or dissolution of the corporate entity

  • A corporation will not face liability for the acts of a natural person if those actions did not benefit the corporation

Sanctions for Corporations

The proposed sanctions for corporations include:

  • Monetary fines
  • Restitution
  • Suspension of business activities
  • Permanent dissolution of the entity

The severity of the sanction depends upon the corporation’s internal rules and procedures, its efforts to rectify any damage caused, and its willingness to cooperate. Additionally, the presence of internal mechanisms to prevent unwanted activities and the early identification and reporting of misconduct can serve as mitigating factors.