Risk and Compliance Management: A Growing Concern in Argentina
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The interconnected world we live in today makes it imperative for companies to have robust systems in place to prevent financial crimes and maintain good governance practices. In Argentina, the pressure is mounting on businesses to ensure they have effective risk and compliance management frameworks.
The Regulatory Landscape
According to Law No. 27,401, undertakings are not criminally liable for risk and compliance management deficiencies. However:
- Legal entities may still face indirect consequences, such as losing access to benefits like “exception from penalties” and “reduction in penalties,” if their risk and compliance management is found wanting.
- Members of governing bodies and senior management may be held civilly liable for breach of risk and compliance management obligations.
Consequences of Non-Compliance
Failure to comply with regulations setting out risk and compliance management obligations can result in:
- Fines, suspensions, and disqualifications imposed by regulatory bodies such as the Argentine Central Bank, Securities Commission, and Financial Information Unit.
- Actions or omissions related to deficient risk management may still trigger breaches of administrative, civil, criminal, and other regulations.
The Absence of Corporate Compliance Defense
Unlike in some jurisdictions, Argentina’s regulatory landscape does not provide for a corporate compliance defense. To reduce penalties, companies must demonstrate:
- Spontaneous self-reporting
- A proper control system
- Return of any undue benefits obtained through criminal activity
No Leading Cases on Risk and Compliance Management Failures
Despite the lack of leading cases, authorities take various factors into account when imposing sanctions on individuals or entities.
The Importance of Risk and Compliance Management
The government has recognized the importance of risk and compliance management by establishing anti-corruption compliance obligations for public officials working in the federal administration. These include:
- Submitting sworn statements of heritage and financial situation
- Reporting conflicts of interest
- Refraining from seeking or receiving benefits or favors that could compromise their independence
Conclusion
As Argentina continues to face the challenges of maintaining good governance practices, companies must prioritize effective risk and compliance management systems to avoid penalties and reputational damage.