Sanctions Compliance in Chile: A New Era for Foreign Companies
Chile’s Economic Crimes Law: A Major Reform
In a significant move to combat economic and environmental crimes, Chile’s Congress has approved a bill expanding criminal liability for such offenses. The legislation, which went into effect on August 17, 2023, marks the largest reform of the penal code since its enactment over 100 years ago.
Understanding the New Law
The Economic Crimes Law categorizes economic crimes into four categories:
Offenses that will always be considered economic crimes
- Commercial bribery
- Insider trading
- Collusion
Offenses committed by employees, officers, or directors of a company
- Infringement of intellectual property
- Fraud
- Tax evasion
Offenses committed by officers and directors for the benefit of the company
- Bribery
- Tax evasion
- Breach of confidence offenses
Embezzlement and money laundering offenses
- All offenses related to goods derived from economic crimes
Liability for Companies
Under the new law, companies can be held liable for offenses committed by their officers, employees, directors, or third parties, even if the company did not benefit directly from the misconduct. This means that foreign companies must ensure their compliance programs meet the requirements set out in the law to avoid liability.
Micro and Small Companies
The law excludes micro and small companies from some penalties and consequences arising from economic crimes. Micro companies are defined as those with annual income below 2,400 UF (approximately USD $97,240), while small companies have annual income between 2,400 UF and 25,000 UF (approximately USD $1,013,300).
Recommendations for Foreign Companies
To comply with the new law, foreign companies should:
Evaluate their company size according to the guidelines set out in the law
- Review their corporate compliance programs to ensure they meet the requirements of the new law
- Identify and assess business-specific risks to determine if additional changes are needed to their compliance program
- Update service agreements with third-party providers to outline their responsibilities for adhering to strict policies on economic crimes
- Put in place a crime prevention model that meets the requirements of the new law, made available to every employee, and update employment agreements accordingly
Conclusion
The Economic Crimes Law in Chile marks a significant shift in the country’s approach to combating economic and environmental crimes. Foreign companies must take note of this development and ensure they have effective compliance programs in place to avoid liability. By understanding the new law and taking proactive steps to comply, foreign companies can minimize their risk exposure and maintain a strong presence in the Chilean market.