Latin America Compliance Enforcement: Argentina, Brazil and Mexico

Argentina

The main prosecution bodies in Argentina are the judiciary branch and the prosecution offices in the federal and local jurisdictions. There is a federal judiciary system in which the federal branch (for both judiciary and prosecution) prosecutes federal crimes, and local (provincial) authorities prosecute local crimes. A crime is, as a rule, considered local unless a specific law establishes that it has a federal nature.

Certain compliance-based criminal offences, such as money laundering and modern slavery, are governed by federal law. Bribery and corruption-related offences, on the other hand, may be federal (when a national or international public official is involved) or local (when a provincial or local public official is involved).

The federal judiciary system is undergoing a gradual process to replace the National Criminal Procedural Code (NCPC), which regulated the procedure for prosecuting federal criminal offences, with the recently enacted Federal Criminal Procedural Code (FCPC). Under the NCPC, the legal authority to prosecute most criminal offences (including compliance-based) at the national level is the federal judges, who are also entitled to delegate an investigation to a federal prosecutor. However, new FCPC establishes that federal prosecutors must carry out all prosecutions. Currently, the FCPC has been implemented in just a few jurisdictions (namely, the provinces of Salta, Jujuy and Mendoza and the City of Rosario, Santa Fe). The others still mostly operate under the rules of the NCPC.

Further, at the federal level, a set of special prosecution units assist judges and prosecutors when dealing with highly complex cases. Three of these units are focused on compliance-based criminal offences: the Office of the Prosecutor for Economic Crime and Money Laundering (PROCELAC); the Prosecutor’s Office of Administrative Investigations (PIA), which specialises in corruption and bribery-related offences; and the Anti-Trafficking Prosecutor’s Office (PROTEX), which deals with cases relating to modern slavery.

Finally, Argentina’s criminal system also allows for claimants to intervene and be part of the accusation. The Financial Information Unit (UIF), an agency created to lead the administration’s anti-money laundering (AML) activity, is entitled to intervene as a claimant in money laundering-related cases. The Anti-Corruption Office (OA) is entitled to intervene as a claimant in corruption-related cases.

Although Argentina has a multiplicity of potential enforcement bodies, it lacks a uniform enforcement policy. In most jurisdictions, the principle of legality still rules. This means that prosecutors have a mandate to prosecute all the criminal offences equally and do not have discretionary powers to decide which to focus on – at least, not openly. This issue generates uncertainty as it is almost impossible to assess with any degree of precision which policy is guiding a prosecution body’s efforts.

As regards self-reporting, Law 27,401, which established corporate criminal liability for corruption-related offences, also provides that spontaneous self-reporting to authorities as a result of an internal investigation is one of the requirements to avoid penalties and administrative liability. Also pursuant to Law 27,401, judges must take self-reporting into consideration when evaluating penalty mitigation.

Law 27,401 requires self-reporting to be ‘spontaneous’. Thus, to benefit from it, the report must be timely, voluntary and prior to any request by the enforcement authorities. An entity should consider self-reporting as soon as it has a reasonable certainty of the wrongdoing. The legal steps to do so may vary depending on the jurisdictional authority to which the report is presented; therefore, entities should always seek specialist counsel prior to self-reporting.

In criminal procedures, the FCPC enables a reduction of penalties for defendants who provide precise, verifiable and reliable details to prevent or to stop certain crimes (including acts of corruption), to clarify facts, to advance investigations and to identify individuals or the recipients of undue benefits, among other things.

Even though self-reporting as a general principle is not mandatory, there are some exceptions. For example, regulated entities, as defined under Law 25,246 (AML and counter-terrorist financing), must report suspicious operations to the UIF, and corporations publicly listed with the National Securities Commission must inform, under Law 26,831, any fact that could substantially affect the placement or trade of securities or development of its activities.

The format in which the entity should report the findings vary according to the jurisdiction and enforcement authority. If a report is submitted before prosecutors or judges, it should be presented in writing. The National Criminal Code Procedure (Section 176) establishes that the report should detail, as far as possible: the facts; the place, time and way in which the crimes were perpetrated; the participants; the victims; the witnesses; and any other relevant element.

Reports made directly to the police or other authorities have no formal requirements and may be made orally. However, given the complexity of most of these situations, this course of action is generally not recommended. When an entity is already aware that it is the subject of a government investigation, special care should be taken when cooperating with law enforcement authorities. The entity must be sure that the authority will not perceive its cooperation as a way of hampering the investigations or as an attempt to obstruct justice (a crime that is punishable in Argentina). It is not common practice either for authorities and private entities to cooperate in a joint investigation or for authorities to delegate part of an investigation to a company under investigation.

Regulatory enforcement for compliance breaches^[2]

As discussed above, although activities involving bribery, corruption and modern slavery are usually in the sphere of the criminal enforcement prosecution bodies, AML is largely dealt with from a regulatory standpoint. Law 25,246, which regulates AML, created the UIF and tasked this entity with coordinating the administration’s AML efforts and policies. Even though the UIF is the main administrative authority responsible for imposing AML measures, the Central Bank (BCRA) and the National Securities Commission (CNV) also have limited authority to impose AML requirements within their scope of competence.

The UIF has adopted the 2012 FATF Recommendations.^[3] Consequently, it has been using a risk-based approach to enforce requirements over regulated entities. These requirements include risk self-assessments, AML training for personnel, customer due diligence and record-keeping, internal controls, periodic activity reports, reporting of suspicious activity, transparency on legal ownership and the identification of final beneficiaries, among other things.

The penalties for non-complying regulated entities are regulatory in nature.^[4] The UIF is the competent government authority responsible for examining compliance and enforcement of AML requirements. It has the power to conduct audits and investigations of regulated entities and can impose fines to those found not to be compliant.

Other than what is stated in its regulation, the criteria for examination can be casuistically inferred from the considerations made as motivation for each of the sanctions imposed. These sanctions are publicly available on the agency’s website. Nevertheless, it is important to note that the UIF does not have a publicly available enforcement policy and it greatly depends on the discretionary decisions of the public official in charge of its management.

Key outcomes in recent enforcement activity

From the perspective of anti-bribery and corruption, even though Law 27,401 was enacted in 2017, thus creating criminal liability for legal entities for corruption-related matters, there have been no judgments as yet, nor any relevant judicial procedure of enforcement involving corporations under that law that is publicly available.

As a contrast, there are many ongoing cases and investigations involving individuals, both former and current public officers and businessmen. Former Argentine president and current vice president Cristina Fernández de Kirchner remains embroiled in a series of corruption investigations. During the past few years, there have been numerous examples of courts dismissing charges against Fernández de Kirchner, her family members and political allies. Many see in this the high level of influence that politicians have over the judiciary. Others think that it is also the result of procedural mistakes made by the investigators at the outset of the investigations. In this sense, it is particularly noteworthy that the OA has announced it intends to quit its role as claimant in judicial investigations and trials to focus more on an educational and preventive role.

Meanwhile, some of the cuadernos^[5]-related prosecutorial efforts have progressed, even if slowly and with mixed success. The Notebooks case has become immense, with several related investigations running in parallel but with no significant progress in recent years. A combination of political interference, lack of resources in the judiciary, inefficient procedural rules, lack of expertise in investigating complex cases with so many ramifications, and insufficient experience in international judicial cooperation might all be factors that account for the poor results to date. In addition, other than some isolated actions concerning specific persons, no foreign jurisdiction has shown any significant determination to step in to investigate the ‘notebook’ allegations and take enforcement actions, alongside Argentina (or in spite of it).

It has been reported that the US Securities Exchange Commission (SEC) is currently investigating allegations against Hewlett Packard for bribes paid to Argentinean custom officers and public officials in 2012.^[6] It also has been reported that Stericycle, Inc, a provider of medical waste and other services, agreed to pay more than US$28 million to settle SEC charges that it violated the anti-bribery, books and records and internal accounting controls provisions of the US Foreign Corrupt Practices Act in connection with violations at its subsidiaries in Argentina.^[7]

From the AML perspective, in a very relevant and notorious case, businessman Lázaro Báez – who reportedly was close to the Kirchner family – and others were convicted in February 2021 for laundering more than US$55 million. Báez was sentenced to 12 years’ imprisonment for these money laundering charges.

The challenges for commercial organisations

The main challenge for commercial organisations in Argentina derives from economic uncertainty, high inflation and instability. These economic and financial exigencies that companies must deal with on a daily basis, combined with poor enforcement, results in many companies not being able to focus on compliance initiatives as an actual priority.

From a compliance point of view, some highly interventionist policies that have been implemented, particularly to administrate the current shortage of hard currency, coexisting multiple exchange rates, added to the daily economic stress are all risk factors that can result in a fertile soil for corruption, bribery and tax evasion. This is reflected in the position Argentina occupies in the Corruption Perception Index maintained by Transparency International.^[8]

Nevertheless, the continuing trend is of a commitment by companies to adopt thorough compliance programmes and to investigate wrongdoing.

Emerging trends

Argentina’s prosecution bodies have not shown any clear indications as to where they will focus their future enforcement efforts. Elections are due to be held in 2023 and it seems likely that the current slow pace of investigations will continue.

From a regulatory standpoint, there is currently a relevant bill due to be considered by the Congress that increases the number of activities susceptible to being regulated by the UIF and the number of entities having special AML obligations. Most notably, the bill intends to include fintechs, payment service providers and lawyers and accountants whose practices focus on company incorporation and administration. The fate of this bill is uncertain as the current government does not have the necessary numbers in Congress to have it passed.

Furthermore, the OA has approved a Registry of Integrity and Transparency for Companies and Entities (RITE), where organisations may register and present their compliance policies and procedures, be evaluated, and obtain official recognition of their level of integrity and transparency. RITE is not yet active but it is expected to begin operating soon. Registration with RITE will not be mandatory but some government agencies are expected to request suppliers and vendors to be registered as a condition for participating in public procurement processes.

Brazil

Legal framework

The prevention and prosecution of corrupt acts, and the recovery of ill-gotten gains, are regulated by the Brazilian anti-corruption legal framework, which consists of the following civil, administrative and criminal legislation: (1) the Brazilian Anti-Corruption Law, known as the Brazilian Clean Company Act (BCCA), is the primary anti-corruption legislation; (2) the Administrative Improbity Law (Federal Law No. 8,429/1992); and (3) the Public Procurement Law (Federal Law No. 8,666/1993). Notably, criminal liability is applicable only to individuals, as legal entities cannot be held criminally liable, with the exception of environmental crimes. Thus, criminal liability for corrupt practices is applicable only to individuals, pursuant to the Brazilian Criminal Code.

The BCCA entered into force in January 2014 and may be enforced against companies involved in corruption of public officials as well as fraudulent practices in public bids and government contracts. In addition to the BCCA, corrupt practices and fraudulent acts in public procurement may also be punished by other federal laws such as the Administrative Improbity Law and the Public Procurement Law. Both laws were enacted in the 1990s and amended in 2021. The amendments to both laws sought to clarify how the legislation applies to the same acts.

The Administrative Improbity Law (as amended by Federal Law No. 14,230/2021) punishes illicit enrichment, losses to the public treasury and harmful acts against the principles of the public administration. Companies involved in acts of administrative improbity are subject to penalties, such as fines, and may face prohibition from contracting with the government.

Although both the Administrative Improbity Law and the BCCA apply to similar conduct, amendments to the former provide that penalties under the Administrative Improbity Law will not be applicable to legal entities if the act of administrative improbity is subject to the BCCA. In addition, a new provision establishes that penalties applied to legal entities based on the Administrative Improbity Law and the BCCA shall respect the principle of non bis in idem, which prohibits prosecution or sanction twice for the same act.

Federal Law No. 14,133/2021 (enacted in 2021 to replace Federal Law No. 8,666/1993 as Brazil’s new Public Procurement Law) punishes fraudulent practices in public procurement with penalties such as fines, suspension and debarment. The administrative infractions set forth in the Public Procurement Law that are also considered illicit acts under the BCCA will be jointly investigated and prosecuted in accordance with the proceedings and competent authority established by the BCCA.

These recent amendments are important legislative responses to avoid multiple prosecutions based on the same facts and bring more legal certainty to the Brazilian anti-corruption legal framework.

Authorities

The relevant authorities involved in enforcement actions and that have the power to enter into leniency agreements are the following:

• Federal Public Prosecutor’s Office (MPF): independent from the Executive Branch, the MPF has powers to pursue criminal lawsuits against individuals and civil claims against companies and individuals. It is currently the leading enforcement entity with the greatest number of signed leniency and plea bargain agreements;
• Federal Attorney General’s Office (AGU): the agency responsible for representing the government in civil claims and with powers to file civil lawsuits;
• Brazilian Ministry of Transparency and Controller’s General Office (CGU): the anti-corruption body of the federal government; and
• Federal Audit Court (TCU): responsible for auditing and overseeing the financial aspects of government contracts and the power to impose administrative penalties such as debarments from participating in public bids in connection to the federal government.

Additionally, depending on the subject-matter and specifics of the prosecution or settlement attempt, there are other Brazilian authorities that may have authority over companies seeking a corporate resolution, such as the following:

• Administrative Council for Economic Defence (CADE), which is Brazil’s antitrust authority;
• Brazil’s Securities and Exchange Commission (CVM); and
• Central Bank of Brazil (BACEN).

Of all the authorities listed above, only the CGU, as the highest-ranking enforcement authority of the federal government, can bind other authorities to its agreement.

These authorities are the predominant federal enforcement agencies. It is important to note, however, that state and municipal agencies may also have enforcement jurisdiction over corruption and other financial crimes. Therefore, if a corrupt act that is subject to a settlement agreement is also subject to the jurisdiction of a state or municipal agency, it is crucial to also consider engaging in negotiations with local authorities.

In this regard, a corrupt act that involves federal funds or government officials but also public procurement fraud or bid rigging in connection with state agencies will require negotiations with at least two agencies (the CGU and the local authority) but most likely will involve three or four. In this regard, companies must consider engaging appropriate counsel to interact with each and all competent authorities. Understanding that each negotiation process is distinct will require independent evidence-gathering, will follow different time frames and result in fines and penalties that can eventually be compensated is also crucial for having appropriate expectations and comprehension regarding the negotiation process.

Enforcement framework

Corruption and other financial crimes are governed by a patchwork of anti-corruption laws that contain guidelines for prosecuting not only bribery per se but fraud in public procurement, misappropriation, conflict of interest and other inappropriate conduct intrinsically related to acts of corruption. These laws also provide a robust legal foundation that recognises and rewards cooperation.

Despite a strong legal foundation, companies operating in Brazil that face enforcement or voluntarily seek to disclose wrongdoings remain uneasy about cooperation and their ability to settle. This unease is rooted in the overlap of the responsibilities and authority of several Brazilian government agencies that negotiate and enter into leniency agreements, which continues to this day.

A recent attempt to untangle this situation and to structure a clear and defined cooperation framework was concluded with one key government agency withholding its signature. The dispute for authority between agencies has discredited them and raised doubts in respect of the legitimate interests they are seeking – whether it is honest disclosures and cessation of corrupt practices or the mere collection of financial compensation for damage.

To better understand the current enforcement and cooperation framework, one must refer to the BCCA provision that determines that ‘the highest authority of each public body or entity’ has jurisdiction to enforce its provisions, although the Federal Constitution and other anti-corruption legislation create similar and overlapping competences for multiple agencies.

Moreover, the BCCA does not provide for any articulation, joint cooperation, communication or review by another authority before an agreement is reach.

Attempted coordination

In August 2020, the TCU sought the assistance and intervention of the Brazilian Supreme Court (STF) for a coordinated agreement encompassing all the authorities involved with leniency agreements.

The inter-agency agreement was signed on 6 August 2021 by the CGU, AGU, TCU, STF and Brazil’s Ministry of Justice. The MPF did not sign the agreement on the grounds that it did not respect the legal attribution of each institution and unconstitutionally restricts the power of the MPF in its anti-corruption activities.

As a result of this lack of consensus, based on the agreed cooperation framework, the CGU and the AGU will be responsible for conducting leniency agreement negotiations and the TCU will be informed of the details for the purposes of calculations of damages and fines. Once a leniency agreement is signed, all parties who signed the cooperation framework will receive information, documents and evidence to ensure no further sanctioning occurs in respect of the same facts (non bis in idem).

In view of the fact that the MPF did not sign the inter-agency agreement, since it understood that the cooperation would undermined the efforts it has promoted as a pioneer in leniency agreements and plea bargaining in the past few years, companies will have to engage with the MPF and local state authorities over the same facts, to avoid facing administrative improbity acts.

In spite of there being common understanding of the importance of a ‘one-stop shop’ to foment a transversal fight against corruption, companies who seek a clean slate will have to engage in negotiations with multiple authorities.

Regarding recent judicial decisions on this matter, it is important to highlight a ruling by the STF in March 2021 that suspended the debarment sanction enforced by the TCU against legal entities that have signed leniency agreements with Brazilian authorities. According to the STF, although the execution of a leniency agreement does not prevent the TCU from acting in its capacity, coordination of activities is needed between public entities regarding enforcement within the anti-corruption legal microsystem, to avoid institutional conflicts or any reduction in the competence of one entity in favour of another.

Agreements in numbers and examples of cooperation

Although not common or free from conflict, there have been some synchronised and multiple authority agreements that consist of simultaneous interactions between authorities that are in agreement about the terms and penalties. One of these led to a resolution entered into by Technip in June 2018 with the CGU, AGU, MPF and the US Department of Justice (DOJ). Not only did this agreement encompass all relevant local authorities but also a foreign agency. Companies should consider this combined and facilitated interagency alignment as their ultimate goal although, realistically, this is not yet the most common scenario. An intermediate alternative that should be considered is engaging with the different authorities at the same moment, to make use of the same investigative efforts and evidence collection even though the final work-product required by each authority may be different. Also, not privileging one authority with more information or taking a significant amount of time to engage local authorities may increase the likelihood of fine compensation and any eventual cooperation or communication between the competent authorities.

In an ideal model of a combined effort in June 2021, Foster Wheeler Energy Limited entered into an agreement between the CGU, AGU, MPF, US DOJ, the US Securities and Exchange Commission (SEC) and the UK Serious Fraud Office.^[9] In another joint resolution, Samsung Heavy Industries entered into an agreement with the CGU, AGU, MPF and the US DOJ in February 2021.^[10] Another noteworthy case concerns Stericycle, which signed an agreement with the CGU, AGU, US DOJ and SEC in April 2022.^[11]

Although still few in number, there have also been joint resolutions between just Brazilian authorities, as was the case between the CGU, MPF and AGU and two advertising agencies in April 2018.^[12]

What to expect

Strong political support is necessary for anti-corruption efforts and, despite significant movement since the Operation Car Wash investigations, efforts have not been as consistent in the past two years.

Despite the efforts during Operation Car Wash (which is now closed), several government-driven activities and sectors remained uninvestigated, such as educational and financial institutions. Additionally, the covid-19 pandemic may have initially affected the launching of new government investigations but also created a significant motive for current investigative efforts as there have been discussions concerning legitimacy within the offering of health products during the outbreak of coronavirus. Notwithstanding, the health sector has also been minimally monitored and investigated.

Thus, it seems as if there are plenty of potential cases but no corresponding interest from the government to initiate the necessary investigations. This definitely does not mean that Brazil is free of corruption within its government structure or that companies in Brazil have ceased illicit practices.

Pledges to root out corruption were made by the current administration although what has actually been witnessed is a significant decrease in the number of corruption investigations and enforcement efforts. Amid this disappointing situation, Brazilians can only hope that anti-corruption efforts are once again strengthened and prioritised.

Mexico

Anti-bribery, anti-corruption and anti-money laundering

Corruption has occupied the national political agenda for more than 10 years in Mexico. It was one of the main points that drove the political campaign of the current president, Andrés Manuel López Obrador. In fact, in 2015, the Mexican Congress approved a major reform of the Mexican Constitution in anti-corruption matters. This reform created the National Anti-corruption System as an entity to coordinate all competent authorities (local, state and federal) to prevent, detect and sanction administrative faults and acts of corruption, as well as in auditing and controlling public resources. This legislation was a response to the publicly known corruption scandals, such as the trials involving Petróleos Mexicanos (Pemex). More than seven years later, Pemex is still regarded as a state company with links to corruption.

As regards AML, the Mexican Criminal Code prohibits operations with resources from an illegal source and financing of terrorism. The Federal Law on the Prevention and Identification of Operations with Illicit Resources (the AML Law), which came into force in 2013, includes a list of vulnerable activities that must be identified and reported by organisations to the Ministry of Finance and Public Credit through the UIF. This AML Law is independent of the specific regulations applicable to financial institutions. The UIF reviews organisations’ reports to identify suspicious activities. During the past few years, the UIF has gained relevance as a source of information for prosecution. In fact, it has been used as a mechanism to prosecute some high-profile cases, instead of the National Anticorruption System.

The General Liabilities Act (the Anti-Corruption Law), passed in 2016 as part of a constitutional reform, makes a distinction between aggravated and regular administrative liabilities. The Anti-Corruption Law addresses corruption from the perspectives of both public officers and private parties. Common administrative liabilities are acts of public officers that contravene the principles of public service but that do not necessarily amount to corruption, such as failing to make periodic filings, failing to report violations to corruption laws or failing to ensure that subordinates observe the anti-corruption laws. Aggravated offences, on the other hand, are actions that result both in the violation of the public service principles and in corruption: bribery or diversion of public resources, among other things. Private parties (both individuals and corporations) may also be held liable under the Anti-Corruption Law.

The available administrative sanctions for public officials include reprimand, suspension, destitution and disqualification, as well as economic sanctions. With respect to the liability of citizens, the Anti-Corruption Law establishes that the competent courts shall determine their responsibility based on their participation in acts involving serious administrative faults and those courts may determine the applicable sanctions, such as economic sanctions, disqualification from participating in public contracting and payment for the damage caused to the public finances. Additionally, organisations can be sanctioned when there is evidence to show that (1) there has been a serious administrative liability (i.e., an aggravated offence, as described above), (2) the organisation obtained an economic benefit, or (3) the administrative body (i.e., management or the board of directors), surveillance bodies or committees, or the owners were involved, or the organisation has been involved in prior misconduct. The sanctions for the foregoing can be suspension of activities, dissolution or intervention of the entity. Corruption is also prosecuted as a criminal offence.

The National Criminal Procedure Code, and the amendments thereto setting forth the circumstances under which an organisation may face criminal liability, took effect in 2016. Organisations can face criminal prosecution for certain federal crimes (including corruption and money laundering activities) if and to the extent that the prosecution can establish that the relevant offence was committed on behalf of the organisation, for its benefit or through its means and provided that the organisation had failed to implement adequate controls. Even though ‘adequate controls’ are not defined in the National Criminal Procedure Code, it is clear that the existence of compliance programmes is taken into consideration when imposing a sanction.

As part of the 2016 constitutional reform, the Mexican Criminal Code was amended to include a specific section of corruption-related criminal offences and the sanctions for public servants and citizens involved in corruption.

The key prosecution body for money laundering activities is the Office of the Mexican Attorney General with the support of the Ministry of Finance and Public Credit. As regards corruption, the key prosecution bodies are the Superior Audit Office of the Federation, the Ministry of Civil Service and the Specialised Prosecutor’s Office in the Fight against Corruption. The Ministry of Civil Service and the related internal control offices are bodies of the federal executive branch; the Superior Audit Office of the Federation falls under the legislative power and the Specialised Prosecutor’s Office in the Fight against Corruption is overseen by the Office of the Mexican Attorney General.

The Ministry of Civil Service is in charge of reviewing how common administrative liabilities notified through the internal control offices are managed. The Audit of the Federation is the body that conducts audits of federal public resources. Irregularities that relate to administrative liabilities are investigated and sanctioned by the Ministry of Civil Service. Both the Ministry of Civil Service and the Superior Audit Office Audit of the Federation are responsible for detecting and investigating cases of aggravated administrative liabilities and civilian liabilities, which are sanctioned by the Federal Court of Administrative Justice (a constitutional autonomous entity endowed with powers to sanction aggravated administrative liabilities of public officers and civilians). When a criminal offence is suspected, the Specialised Prosecutor’s Office in the Fight against Corruption will conduct the investigation. If the Office concludes that a criminal offence has been committed, it initiates a criminal action before the criminal federal courts.

The Anti-Corruption Law includes provision for a leniency programme by virtue of which an offender who confesses its offences is entitled to a reduction of the applicable fine of between 50 per cent and 70 per cent, and immunity from being banned from participating in public tenders, provided that:

• a formal investigation has not been notified to any of the alleged offenders;
• the applicant is the first to provide evidence that is sufficient to verify the existence of the infringement;
• the applicant cooperates fully and continuously with the competent authority investigating and prosecuting the matter; and
• the applicant ceases its infringement on being instructed to do so by the competent authority.

Later applicants for leniency may obtain a reduction in any applicable fine of up to 50 per cent if they produce further evidence to the investigative or prosecuting authority. If the formal investigation has already been initiated, an applicant is entitled to a reduction of up to 30 per cent of the applicable fine. It is important to note that this leniency programme does not grant immunity from criminal prosecution against directors, officers and employees. At the time of writing, there are no specific guidelines for the leniency programme, which can be viewed as a deterrent to using this mechanism.

In addition to leniency programmes, the Anti-Corruption Law also considers integrity policies and the active participation and cooperation of the management or shareholders of an organisation in an investigation as mitigating factors that must be weighed when imposing sanctions on an organisation. By contrast, it is an aggravating factor if the management of a corporation fails to report corrupt acts within the corporation of which they are aware. Pursuant to the Anti-Corruption Law, an integrity policy must include:

• an organisation and procedures manual that delineates responsibilities and specifies chains of command and leadership;
• a code of conduct;
• audit and control systems to constantly and periodically examine compliance with integrity standards throughout the corporation;
• whistleblower and reporting systems;
• training systems and processes;
• human resources policies that prevent the hiring of individuals who could compromise the organisation’s integrity; and
• mechanisms that ensure transparency and disclosure of interests.

To mitigate the risk of enforcement action, organisations must establish a robust integrity programme.

The key outcomes in enforcement activity in recent years have been centred on financial and tax-related crimes. The president has campaigned against tax evaders in his daily conferences and several organisations have been punished for tax evasion. Further, the UIF has had a central role as prosecutor for several companies and civilians. According to a UIF report, 38,996 bank accounts have been blocked following a direct ordered from the UIF. Between January and April 2022, 26 complaints have being filed before the federal criminal courts involving 190 persons. Corruption is the most common felony denounced.^[13]

The activities of the Superior Audit Office of the Federation have also been key in revealing major corruption cases (such as Odebrecht) in which public officers and civilians have been involved. However, during the past three years, there has been a decrease in the audit function.^[14] During the 2018 tax year, the Superior Audit Office carried out 1,815 audits, whereas in 2019 it only performed 1,363 audits and 1,617 in 2020. (The audits for the 2021 tax year are currently being carried out.) The Office disclosed in 2021 that the cancellation of the project to build an international airport in Mexico City would amount to 331 billion pesos. After two months of discussion with the executive power, and owing to political pressure, the Office corrected the estimate to 113 billion pesos. This was perceived as a threat to the independent position of the Superior Audit Office of the Federation. This situation is likely to continue and, as the Superior Audit Office’s power decreases, there will not be any major prosecutions.

During the past two years, enforcement has been centred on tax and finance-related crimes rather than strictly corruption matters. Finally, as prevention mechanisms themselves, organisations should be aware of the need to establish very robust compliance programmes, which should incorporate strict compliance in respect of tax and anti-money laundering matters, in addition to anti-bribery and anti-corruption.

Footnotes