Chile’s New Economic and Environmental Crimes Law: A Game-Changer for Companies
A significant shift has taken place in Chile’s legal landscape with the introduction of the new Economic and Environmental Crimes Law. This law not only introduces new penalties but also expands existing criminal liability to companies, increasing the risks associated with being a company director.
New Penalties and Increased Risks
Under the new law, individuals can now face fines multiplied by the number of days in their sentence (up to 9 years) for economic crimes, compared to fixed amount fines previously. Additionally, the law introduces a new penalty: confiscation of profits (“comiso de ganancias”), which can be applied in addition to all Economic Crimes.
Environmental Crimes
The law also includes new environmental crimes, such as:
- Concealing or presenting false information during environmental project evaluations
- Obstructing control or audits by Environmental Authorities
These crimes carry penalties ranging from 61 days to 10 years of imprisonment, with mandatory fines between $9,500 and $9.53 million.
Changes to Law No. 20,393 on Criminal Liability of Legal Entities (LCLLE)
The LCLLE now applies to a broader range of legal entities, including:
- Those created under private or public law
- State-owned companies
- Universities
- Political parties
- Religious entities
Criminal liability can be attributed to a legal entity if an offence is committed by someone within the company or a third party working for it, regardless of whether it was carried out in the interest of the entity.
Importance of Compliance Programs (CPMs)
The law increases the importance of having effective CPMs in place. CPMs must now include:
- Secure reporting channels
- Employee training
- Periodic evaluations by independent third parties
These programs can operate as an exemption from liability, but companies must ensure they are properly implemented and maintained.
Expert Insights
According to Franco Acchiardo, Managing Partner at Clyde & Co Chile, “This new Law drastically increases the risks associated with being a company director. Any decision that could potentially be related to the new behaviors regulated in it must be duly supported and documented.”
Timeline and Action Items
The law entered into force on August 17, 2022, and will apply to all acts and omissions committed from that date onwards.
- Companies have roughly a year to implement or update their CPMs before the amendments to the LCLLE take effect on September 1st, 2024.
- Companies must analyze their core business in detail, identifying main risks associated and areas of exposure, and adapt their internal CPM accordingly.
As the law’s complexity demands a specialized approach, companies should seek expert advice to ensure compliance with the new requirements.