Italian Companies Face Increased Risk of Liability for Employees’ Offenses
In Italy, companies are facing growing scrutiny over their role in preventing criminal offenses committed by employees or representatives. Since 2001, a legal entity is held criminally liable if its directors, representatives, executives, managers, agents, and employees commit certain crimes while acting in the interests or to the benefit of the company.
Risk Management Obligations
Italian subsidiaries or branches of foreign legal entities must comply with the same requirements as all other undertakings incorporated in Italy. This includes:
- Establishing adequate risk management processes to identify, assess, and mitigate potential risks.
- Implementing effective internal policies, rules, and procedures.
Banks and insurance companies operating in Italy are required to establish:
- A comprehensive risk management function
- A permanent and effective compliance function
- An independent internal audit function
Consequences of Non-Compliance
Violations of these rules can result in serious consequences, including:
- Civil damages
- Administrative fines
- Criminal liability
- Publication of judgments on the press
- Disqualification from contracting with public administrations
- Inhibition of business activities
- Appointment of trustees or commissioners to replace company management
GDPR Compliance
The General Data Protection Regulation (GDPR) 679/2016 also applies to companies operating in Italy. The regulation requires:
- Implementing robust data protection measures to protect personal data and prevent violations.
- Failure to comply with the GDPR can result in significant fines and other penalties.
Conclusion
Italian companies must take a proactive approach to risk management and compliance to avoid potential liabilities. By implementing effective policies, procedures, and internal controls, companies can minimize their exposure to criminal liability and ensure that they are in compliance with relevant regulations.