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Compliance Risk Management in Mexico: A Changing Landscape
Mexico’s legal and regulatory framework has traditionally played a limited role in corporate risk and compliance management, with a focus on commercial and business contingency rather than criminal liability or product liability. However, recent developments suggest that this landscape is shifting.
Increased Enforcement Activity
The US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have been aggressively enforcing the Foreign Corrupt Practices Act in Mexico, leading to a significant uptick in enforcement actions. This increased scrutiny has prompted Mexican companies to take notice and invest more heavily in compliance and risk management.
Criminal Liability for Corporate Entities
In December 2014, the Mexico City legislature enacted criminal liability for companies, imposing fines based on average daily profits rather than a fixed amount. This new law has led to increased focus on risk and compliance management, particularly in industries where corruption is prevalent.
General Law of Administrative Responsibilities
The General Law of Administrative Responsibilities, which came into effect in July 2017, sets out detailed standards for companies to avoid liability. Having an integrity policy or compliance program can serve as an affirmative defense against corporate criminal liability, while failure to have such a program can expose companies to significant penalties.
Key Laws and Regulations
Highly regulated industries, such as finance, insurance, and healthcare, are subject to specific laws and regulations governing risk and compliance management. For companies in general, the key laws and regulations include:
- Corporate law
- Consumers’ protection law
- Commercial law
- Labor law
- Administrative law
- Criminal law
Industry-Specific Laws and Regulations
The General Law of Administrative Responsibilities sets out main standards for risk management in anti-corruption matters, while the Model Program for Corporate Integrity provides recommendations for compliance programs or integrity policies. Industry-specific laws and regulations also establish processes for various industries, such as:
- Pharmacovigilance in healthcare companies
Governance Obligations
Undertakings operating in Mexico are subject to risk and compliance governance obligations, regardless of their form or domicile. This includes implementing and maintaining an adequate integrity policy or compliance program, which is expected rather than mandatory. Failure to do so can expose companies to significant penalties and liability.
Conclusion
Compliance risk management in Mexico is undergoing a significant transformation driven by increased enforcement activity and new laws and regulations. Companies operating in the country must adapt to these changes to avoid liability and maintain their reputation.