Corporate Governance and Financial Crime Prevention: A Growing Concern for Businesses in Mexico
As Mexican authorities continue to crack down on financial crime, companies operating in the country are under increasing scrutiny to ensure they have robust governance structures in place to prevent criminal activity. The introduction of corporate criminal liability in 2016 has led to a significant shift in the way businesses approach compliance, and failure to adapt can result in severe consequences.
Understanding Corporate Criminal Liability
Until recently, Mexico’s legal system did not hold corporations liable for crimes committed by their employees or agents. However, this changed with the passage of legislation establishing a criminal liability regime for companies. Under this regime, companies can be held criminally responsible for crimes such as:
- Bribery
- Tax evasion
- Money laundering
- Financial fraud
if they fail to prevent these activities through internal controls and measures.
Consequences of Non-Compliance
The new legal standard has led to a surge in prosecutions against businesses, with federal and state prosecutors increasingly active in pursuing cases against both national and foreign-owned companies. The consequences of non-compliance can be severe, including:
- Heavy fines
- Imprisonment for executives
- Damage to a company’s reputation
Best Practices for Compliance
To mitigate these risks, companies must prioritize the prevention of corporate crimes by implementing robust compliance programs. This includes:
- Conducting criminal risk assessments
- Implementing internal controls
- Designating a standing internal body responsible for preventing risk of criminal liability
- Conducting third-party due diligence
Establishing a Culture of Integrity
The establishment of a culture of integrity within an organization is also crucial in preventing criminal activity. Companies must ensure that their employees are aware of the importance of compliance and are empowered to report any suspected wrongdoing.
Enforcement Actions by Mexican Authorities
Mexican authorities have taken a proactive approach to enforcing financial regulations, including:
- Prosecution of companies for tax evasion and money laundering
- Addition of companies to blocked persons lists and freezing of bank accounts in cases where they have been found to be involved in criminal activity
Global Implications
The implications of non-compliance are not limited to Mexico alone. Companies that operate globally may face enforcement action under international laws, such as the US Foreign Corrupt Practices Act, for activities related to bribery and other financial crimes.
Conclusion
In conclusion, companies operating in Mexico must take seriously their obligation to prevent corporate crimes and ensure that they have robust compliance programs in place. Failure to do so can result in severe consequences, including criminal liability and damage to a company’s reputation. By prioritizing integrity and implementing effective compliance measures, businesses can reduce their risk of non-compliance and maintain a strong reputation in the market.