General context, key principles and hot topics
1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.
There are three investigations with public impacts, all of which concern irregular financing of political activity. The cases have been named after the companies that were used to deliver the bribes. The first is known as the Penta case, which to date has not brought any convictions for bribery. However, the two owners of the company were prosecuted and imprisoned, which is unprecedented in Chile. They were ordered to be detained in prison in 2015. Then, in 2018, they were convicted for tax offences but finally acquitted of the crime of bribery. There are still open aspects of this case, as several politicians and family members submitted false invoices to this company to finance their campaigns.
Another case that emerged in 2015 involves Sociedad Química y Minera de Chile (SQM), a lithium mining company in the north of Chile that also resorted to illegal practices of political financing through the use of false invoices. In the SQM case, the company itself was charged but agreed to a non-prosecution agreement with the Prosecutor’s Office to suspend the processing of the case against it. Nevertheless, many politicians and people close to them were charged. The general manager of the company was indicted for bribery and tax crimes, and is still awaiting trial, despite the fact that seven years have passed since the case commenced.
The industrial fishing company Corpesca was also involved in payments to politicians. Unlike the previous cases, however, in Corpesca, the Prosecutor’s Office managed to convict a senator, a deputy and the company itself for the crime of bribery during 2021. This case marks a milestone in Chile as it is the first conviction imposed on a company in trial. Previous cases against companies were always resolved through a system of agreements with the Prosecutor’s Office.
2 Outline the legal framework for corporate liability in your country.
Companies can be held liable for the damage they cause (civil liability). They can also be held accountable for administrative infractions by state agencies or courts (administrative liability) and can be held liable for certain crimes (criminal liability).
In the past, companies could only be held civilly or administratively liable, and only natural persons could be held criminally liable. Since Law No. 20,393 (on criminal liability of corporate entities) was enacted in December 2009, however, companies can be declared as participants in a crime committed for their benefit by a natural person connected to them. The natural person must be an owner, a representative, a main executive or another individual who works directly with the company.
Nevertheless, criminal liability of companies is currently not exhaustive. According to Article 1 of Law No. 20,393, only a closed list of crimes by company executives can result in liability. At present there are 16 such offences, among which are bribery, money laundering, unfair administration and damage to hydrobiological resources. However, a bill currently being processed, called the Economic Crimes Law, seeks to expand this list to approximately 120 crimes.
It is important to point out that the company will be criminally liable if the crime committed by its executive is a result of a breach by the company of its duties of supervision and management. Law No. 20,393 allows the company to account for the fulfilment of this duty by implementing a compliance system that establishes controls in its operations that effectively mitigate the crimes listed in the Law.
3 Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?
Many entities regulate the behaviour of corporations, including sectoral public agencies called superintendencies. These entities can additionally fine companies if they violate sectoral regulations. There are superintendencies for the following sectors – health insurance, telecommunications, health services, casinos, social security, electricity and fuels, pensions, environment, education, and insolvency and reinstatement – and each has a legal regulation that governs its operation
In addition, there are certain entities that supervise certain types of conduct. The National Consumer Service (SERNAC) regulates and oversees conduct that is contrary to consumer rights; the National Economic Prosecutor’s Office (FNE) regulates and investigates conduct contrary to free competition; and the Internal Revenue Service (SII) regulates and oversees tax returns and related conduct.
Jurisdiction is defined by the area of special interest and by the particular serious conduct or behaviour. As a result, problems can arise with double prosecution, since there is an overlap between the activities of the tax authorities and the activities of the Public Prosecutor’s Office in its role of investigating crimes. There is also an overlap between different tax activities. Certain duplications have been defined by specific regulations, such as in the case of audited activities.
4 What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?
The authorities do not require a basis for initiating their investigations, as they can act ex officio in the majority of cases, except in certain situations where they require a complaint from the affected person. They do require judicial authorisation to carry out intrusive measures that affect fundamental rights, such as telephone interceptions or raids.
The authorities are required to have well-founded presumptions in order to charge the persons they are investigating, especially to establish measures that restrict their freedom or other rights during the investigation period, which must be validated by the courts.
5 How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?
This must always be done before the courts.
6 Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?
Yes, many agencies have the capability to agree on immunity or reduction of fines to reflect co-operation by individuals or companies. In particular, there is a leniency system that is available for collusion cases and can be used before the FNE, and an anonymous whistleblower system that can be used before the Financial Market Commission, which is similar to the US Securities and Exchange Commission.
7 What are the top priorities for your country’s law enforcement authorities?
The priorities for criminal prosecution are drug trafficking, terrorism, corruption, cartels and environmental infractions. In general, the aim is to strengthen the prosecution of organised crime.
8 To what extent do law enforcement authorities in your jurisdiction place importance on a corporation having an effective compliance programme? What guidance exists (in the form of official guidance, speeches or case law) on what makes an effective compliance programme?
The law grants exemption value to criminal compliance programmes with respect to the crimes included in Law No. 20,393. Additionally, it recognises the mitigating value of compliance programmes that include regulations protecting the rights of consumers. There is a bill in Congress that seeks to grant mitigating value to compliance programmes that include personal data regulations.
Additionally, there is an FNE guide that recognises the importance of antitrust compliance programmes and provides guidelines on when they are effective. Several rulings of the Antitrust Court have imposed compliance as a sanction, establishing the minimum contents of a compliance programme (Supermercados case).
The Ministry of the Interior and Public Security has published a guide that establishes the requirements of a compliance programme in respect of criminal matters and SERNAC has issued a technical regulation (INN/ET1) on the elements that must be included in a consumer compliance programme.
9 Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.
There is no global cybersecurity regulation in Chile. There is a bill in Congress that will regulate this topic but to date there is only partial protection for certain data through the Data Protection Act and regulations that apply to public agencies.
10 Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?
Law No. 21,459 regulating computer crimes was published on 20 June 2022. This Law updated previous legislation on this matter from 1993, including the offences regulated by the Convention on Cybercrime (known as the Budapest Convention). At present, the following are regarded as computer crimes: illegal access, illegal interception, data interference, system interference, misuse of devices, database theft, data fraud and data forgery.
Cross-border issues and foreign authorities
11 Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.
National criminal law does not have extraterritorial effects, except in specific cases. One of these corresponds to the crime of money laundering, since by virtue of the provisions of Law No. 19,913, money derived from an illicit act committed abroad may be punished in Chile. Likewise, the crime of bribery is punishable when a private individual bribes a foreign public official.
12 Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.
The main challenge corresponds to the speed with which foreign authorities and entities can coordinate with local ones, for the development of investigative procedures conducive to the prosecution and punishment of crimes in Chile. As an example, on at least two occasions in our experience, we have had to ask the Public Prosecutor’s Office to request co-operation from international bodies for the investigation of crimes, and in both cases the responses have taken years to arrive, hindering the local prosecution of those responsible.
13 Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the ‘anti-piling on’ policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?
If an offence is committed in Chile, there is no prohibition preventing an offence that was tried abroad from also being tried in Chile. Nor is there a rule that specifically prevents the same acts from being punished by different authorities. However, in these cases there has been much discussion at the jurisprudential and doctrinal level regarding the application of the double jeopardy principle. As a general rule, the criterion for exclusion has been established as the legal aim and the purpose of protection of the rule, so that, if it can be concluded that the different rules intended to be applied for the punishment of the same act pursue the protection of the same legal aim or have the same purpose, the double punishment is rejected.
There is no procedure in Chile that is equivalent to the US ‘anti-piling on’ policy.
14 Are ‘global’ settlements common in your country? What are the practical considerations?
There have been no agreements of this nature on a common ground. We know of only one example of a collusion case that will apply to companies at the same time in several jurisdictions. In a case ruled by the Antitrust Court (No. 207-10), two companies were sanctioned for participating in a transnational cartel that increased the price of low-power hermetic compressors for refrigerators in the Chilean market. Although lack of jurisdiction was alleged, the Supreme Court ruled that the purpose of the national regulations is to protect free competition and to accept that they do not have jurisdiction would mean excluding controls and sanctions of the infringing conduct in Chile.
15 What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?
The decisions of foreign authorities on events that have occurred in Chile could prompt the initiation of an investigation at the local level, but there is no rule that regulates how foreign decisions intervene in relation to possible criminal acts that have occurred in Chile. The only exemptions are the extradition rules applied to individuals, which forbid double prosecution if the person has already been found guilty of the same crime in another country.
Economic sanctions enforcement
16 Describe your country’s sanctions programme and any recent sanctions imposed by your jurisdiction.
Law No. 20,393 establishes the penalties for legal entities that are convicted for crimes committed within the legal entity. These are categorised according to whether the offence is considered a crime or a simple misdemeanour.
The penalties for crimes are:
- dissolution of the juridical person or cancellation of the juridical personality;
- prohibition from entering into acts and contracts with the state (in the most serious instances, this can apply in perpetuity);
- loss of tax benefits or absolute prohibition from receiving tax benefits for between three years and one day and five years; and
- the maximum fine applicable for tax benefits.
The penalties for misdemeanours are:
- temporary prohibition from entering into acts and contracts with the state for up to three years;
- loss of tax benefits for up to three years or absolute prohibition from receiving tax benefits for between two and three years; and
- a minimum to medium fine.
The most recent case in which a legal entity was convicted for crimes committed internally is the Corpesca case. The company was convicted of bribery and was ordered to pay a fine of 10,000 UTM (monthly tax units). Corpesca was also ordered to publish in a national newspaper with national circulation, at its own expense, details of its sentence for being held criminally responsible for bribery crimes as perpetrated by its general manager Francisco Mujica Ortúzar, between 2010 and 2013, and in relation to the crimes of bribery for which former senator Jaime Orpis Bouchon and former deputy of the republic Marta Isasi Barbieri were convicted.
17 What is your country’s approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?
Since the enactment of Law No. 20,393, which incorporated corporate criminal liability into the national legal system, there have not been many cases in which companies have been convicted for their responsibility in offences committed within the company and on their behalf. This is because the criminal procedure system allows the prosecuting entity to conclude cases by alternative means, such as those used historically by the Public Prosecutor’s Office, which has concluded investigations through conditional suspensions of proceedings (a mechanism that does not imply a conviction) or, in the best of cases, abbreviated trials. This changed with the Corpesca case, which, because of the significant coverage by the media, forced the Public Prosecutor’s Office to take it to oral trial. Thus, after months of trial, a legal entity was convicted for the first time in Chile.
18 Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?
This is particularly true with respect to the Financial Analysis Unit (UAF), which is the public entity in charge of preventing money laundering and terrorist financing, placing special emphasis on certain legal entities and natural or legal persons, whose activities pose a higher risk of committing these crimes. The UAF frequently collaborates with the Financial Action Task Force, being the international organisation in charge of this matter.
19 Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.
20 To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?
This does not apply in Chile.
Before an internal investigation
21 How do allegations of misconduct most often come to light in companies in your country?
The most important investigations in Chile have been initiated by whistleblowers (anonymous) and in collusion cases, the most important cases have come to light through leniency processes before the National Economic Prosecutor’s Office.
22 Does your country have a data protection regime?
Chile has a personal data protection law (Law No. 19,628), which dates from 1999. A bill is currently being processed in Congress to update this regulation.
Law No. 21,459, which identifies new computer crimes, was enacted in June 2022. Under this Law, both natural and legal persons can be held criminally liable and prosecuted for these offences.
23 To the extent not dealt with above at question 9, how is the data protection regime enforced?
Law No. 19,628 only establishes civil penalties for infringements with respect to the processing of personal data. In particular, it establishes the obligation to compensate for the damage resulting from non-compliance with the law. Under the recently enacted Law No. 21,459, perpetrators are punished with prison sentences, ranging from a minimum of 61 days to a maximum of five years, in addition to fines.
For legal persons found guilty of these offences, the penalties corresponding to simple offences, as stipulated in Law No. 20.393, are applied.
24 Are there any data protection issues that cause particular concern in internal investigations in your country?
Since the recently enacted Law No. 21,459 establishes criminal liability not only for natural persons but also for legal entities, the main concern of internal investigations is the detection and prevention of conduct that could generate corporate criminal liability.
25 Does your country regulate or otherwise restrict the interception of employees’ communications? What are its features and how is the regime enforced?
National legislation allows the interception of employee communications by the employer, provided that certain requirements are met. The means of communication must be one provided by the employer (such as company email) and the communications must be relevant to the matter under investigation. Further, the employer’s power to have access to these communications must have been previously informed to the employee, as a general rule, in the employment contract or an annex thereto.
Dawn raids and search warrants
26 Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.
Only criminal, securities and antitrust law allows the competent authority to carry out these activities as part of the investigation process. Article 205 of the Code of Criminal Procedure allows the entry and search of closed places when it is believed that the accused or certain means of evidence are in a building or closed place, as long as the owner of the place gives their consent. Otherwise, the police will take measures to prevent escape and authorisation will be requested from the judge hearing the case.
Under the Securities Act (Law No. 21,000), the Financial Market Commission has the same requirements.
Decree Law No. 211, which regulates the powers of the National Economic Prosecutor’s Office, establishes in Article 39(n):
In serious qualified cases of investigations aimed at proving the conduct of those described in letter a) of article 3, request, by means of a well-founded petition and with the prior approval of the Antitrust Court and authorisation by the Judge of the Court of Appeals of Santiago for the Carabineros or the Investigative Police, under the direction of the officer of the National Economic Prosecutor’s Office indicated in the request, to proceed to:
n.1) Enter public or private premises and, if necessary, to raid and break into them;
n.2) To search and seize all kinds of objects and documents that could prove the existence of the infringement;
n.3) Authorise the interception of all kinds of communications
27 How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?
Article 220 of the Code of Criminal Procedure sets out the types of documents that may not be subject either to seizure or a warning being issued for their delivery, namely:
- communications between the accused and persons who may refrain from testifying as witnesses owing to kinship or by virtue of the provisions of Article 303 of the Code,
- the notes taken by the above-mentioned persons on communications entrusted by the accused, or on any circumstance to which the power to refrain from testifying is extended; and
- other objects or documents, including the results of examinations or diagnoses relating to the health of the accused, to which the power to refrain from testifying is naturally extended.
The limitations provided for in Article 220 apply only when the communications, notes, objects or documents are in the possession of persons whom the law recognises are permitted not to give a statement; in the case of the persons mentioned in Article 303, the limitation shall extend to the offices or establishments in which they exercise their profession or activity.
However, these limitations shall not apply when the persons empowered not to testify are charged with the act under investigation or when it is a question of objects and documents that may be confiscated, because they are connected to a punishable act or have been part of the commission of a punishable act.
If there is any doubt as to the appropriateness of the seizure, the judge may order it by a well-reasoned decision. The objects and documents thus seized shall be placed at the disposal of the judge (without prior examination by the public prosecutor or the police), who shall decide, in view of those objects and documents, on the legality of the measure. If the judge considers that the seized items are of a type listed in Article 220, an order shall be issued for their immediate return to the respective person. Otherwise, the judge shall hand them over to the prosecutor, for such purposes as may be deemed appropriate.
If at any time during the proceedings it is ascertained that the seized objects and documents are of a type included in Article 220, they may not be treated as evidence in the corresponding procedural stage.
28 Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?
The law confers on the accused the right to remain silent or to testify without taking an oath. Likewise, it is established that the spouse or cohabitant of the accused, their ascendants or descendants, their relatives up to the second degree of consanguinity or affinity, their ward or guardian, their adopter or adoptee will not be obliged to testify.
In all other cases, those summoned as witnesses must give their testimony.
Whistleblowing and employee rights
29 Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?
In the area of competition, both individual and corporate leniency are recognised. This allows for exemption from or reductions to the penalties faced by companies or persons who co-operate, according to the extent to which they provide evidence to prove the conduct under investigation and to determine who is responsible. All persons, natural or legal, who have co-operated with the competent authority are eligible for leniency.
Whistleblowers must provide the National Economic Prosecutor’s Office with accurate, truthful and verifiable information about the conduct, and comply with the legal requirements. To be eligible for exemption from fines and criminal penalties, the whistleblower must be the first to apply for the benefit. Any subsequent whistleblower must provide additional background information to that submitted by the first.
As regards securities regulation, a whistleblower can be eligible to receive part of the fine. Regulation No. 456 issued by the Financial Market Commission regulates the application process for anonymous whistleblowers to access the benefits granted by law (i.e., between 10 per pent and 30 per pent of the fine imposed). The complaint must be filed by a person who is not a victim or perpetrator of the crime, and must be serious, accurate, verifiable and unknown to the authority.
30 What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?
The law does not provide specific rights for those under investigation, so as a general rule, the rights and guarantees of due process apply. This is a matter that has been recognised by jurisprudence.
31 Do employees’ rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?
The Labour Code empowers employers to dismiss workers who have become involved in the commission of a crime in the performance of their duties, or who have seriously breached the company’s internal codes. In this type of dismissal, the worker is not entitled to a severance indemnity payment. Article 160 of the Labour Code provides as grounds for dismissal, among others, a lack of probity, sexual or labour harassment and serious breach of the obligations set forth in the employment contract.
32 Can an employee be dismissed for refusing to participate in an internal investigation?
According to the provisions of Article 160 of the Labour Code, this could be considered a serious breach of the obligations of the employment contract, and therefore an employee refusing to be subject to an authorised internal investigation could be dismissed.
Commencing an internal investigation
33 Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?
The investigation procedure is generally regulated under an internal company policy and is also detailed in the company’s internal regulations, to which all employees have access. These regulations address issues such as the deadlines and stages of the investigation, the authority in charge of resolving the matter and the possible applicable sanctions, as well as other issues safeguarding the due process during the investigation.
34 If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?
There is no legal obligation to report a crime, notwithstanding the possibility that individuals who know of the existence of a crime and do not report it may be considered participants in the crime. However, Law No. 20,939 establishes initiatives to report a crime when it is committed within and for the benefit of the company, as part of the proper functioning of the compliance system, since it establishes that the existence of a crime prevention system may be considered an exonerating or mitigating factor in the liability of the legal person.
35 What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?
Law No. 19,628 establishes that no authorisation by the data owner is required when personal data is obtained from public sources of information or is requested by a public authority. Therefore, a company must submit information or documents under the terms established by the corresponding authority to request information involving personal data.
36 At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?
This decision would be made by the company since there is no legal obligation to do so.
37 How are internal investigations viewed by local enforcement bodies in your country?
In terms of labour regulation, the Labour Department, which is in charge of issuing administrative policies regarding compliance with the Labour Code, has stipulated in several statements that it is necessary for employers to have an appropriate investigation procedure when it is required to be used. In addition, there is an incentive to perform investigations properly because if a worker is dismissed as a result of a well-conducted and documented investigation, the risk of a wrongful dismissal lawsuit for the company is reduced.
38 Can the attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?
There is no law regulating the attorney–client privilege in internal investigations. However, the privilege would apply to the client during internal investigations (i.e., the company) with respect to facts that may compromise the liability of the legal entity.
There is legal recognition of the privilege for attorneys to refrain from answering questions in court regarding issues known within the attorney–client relationship.
39 Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?
The legal duty of secrecy is generally owed by the lawyer to the client as an implicit rule. Therefore, when a company is involved, it benefits from the privilege of confidentiality regarding procedures or facts acknowledged or known by an in-house lawyer and that may harm the company.
40 Does the attorney–client privilege apply equally to in-house and external counsel in your country?
There is no legal statement that allows this differentiation to be made; therefore, it should be applied in a similar manner in both cases. The National Economic Prosecutor’s Office has made this differentiation during recent antitrust cases in respect of internal communications led by the in-house counsel by denying the right to these attorneys. Chilean advocacy has been criticised because of this statement.
41 Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to investigations in your country?
Yes, the privilege is applied for all parties involved in an investigation. This objective is generally achieved through the signing of non-disclosure agreements.
42 To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?
There are no exceptions for the attorney–client privilege. However, there is the possibility for counterclaim under antitrust laws and the Securities Act, which can be exercised by those who have knowledge of or have participated in the events reported.
43 Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?
Yes, mainly in antitrust investigations, companies have the right to prepare written documentation to maintain the confidentiality of privileged information. However, it is a right recognised in securities and criminal investigations as well.
44 If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?
It is likely, unless the information shared in another country is published by some public source of information.
45 Do common interest privileges exist as concepts in your country? What are the requirements and scope?
No such privileges exist.
46 Can privilege be claimed over the assistance given by third parties to lawyers?
It cannot be asserted as the attorney–client privilege. However, confidentiality can be enforced through a contract or other document.
47 Does your country permit the interviewing of witnesses as part of an internal investigation?
Yes, it is permitted.
48 Can a company claim the attorney–client privilege over internal witness interviews or attorney reports?
Yes. In fact, clients require interviews with witnesses to be conducted to ensure the confidentiality of the research.
49 When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?
The main guidance is for a properly performed process and respect for the fundamental rights of individuals. Accordingly, the interview is conducted in respectful terms, the continued employment of the workers is ensured, and it is done in confidence. Interviews with former employees are not usually performed since they are no longer part of the company, and, therefore, they cannot be required to make a statement.
50 How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?
Internal investigations are generally regulated under the company’s internal regulations or in procedures that must be notified to all employees. For this reason, no additional documents are usually provided. Employees can be represented by a lawyer if they believe it is necessary, but it is not a requirement or a very common practice.
Reporting to the authorities
51 Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?
Certain parties are required to report to the Financial Analysis Unit (UAF) about suspicious transactions related to money laundering.
52 In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?
When the event involved may affect the safety of the company, its reputation or its participation in the markets, this would be advisable. Additionally, if there are possibilities of accessing the benefits of counterclaim, it is highly recommended to self-report promptly. The jurisdiction generally operates only in Chile, so it would be necessary to analyse whether self-reporting in another country could bring some benefit or prevent some greater risk.
53 What are the practical steps needed to self-report to law enforcement in your country?
It will depend on the matter in question. If it relates to competition, it is a requirement to first report to the National Economic Prosecutor’s Office (FNE) in accordance with Articles 39 bis and 63 of Decree Law No. 211.
Subsequently, the FNE will analyse the reliability of the facts, whether or not there is a supposition of collusion, whether there is a high probability of being the first to report the crime, and whether the information provided is considered essential supporting documentation to the investigation.
If the report is made by a person who qualifies as an anonymous whistleblower, as defined in the Securities Act, it must first be established that the person is neither a victim nor the author of the facts. If this is the case, it is not considered as a self-report.
Responding to the authorities
54 In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?
In general, the response is made through a representative attorney. There is a web platform for the Public Prosecutor’s Office through which requests can be made for hearings with the prosecutor in charge, background information can be provided or investigation procedures requested. The relationship with the police is not as direct and is mediated by the prosecutor.
55 Are ongoing authority investigations subject to challenge before the courts?
Yes. The Court of Appeal is a specialist court that ensures that the investigation process is well-conducted and that the rights of those involved are respected.
56 In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?
In this case, the foreign court must send a letter rogatory to the Chilean courts in accordance with the applicable regulations, provided that there is a bilateral agreement that recognises the effects of such proceedings.
57 If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for and produce material in other countries to satisfy the request? What are the difficulties in that regard?
The company would not be required to deliver information that is not directly related to the events that occurred in the country, since it is a problem of jurisdiction.
58 Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?
It is not typical, but there is an international agreement that allows the Investigations Police of Chile to be part of Interpol investigations, which aims to coordinate police efforts that allow the arm of justice to be extended beyond borders.
59 Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?
Yes, law enforcement authorities have that obligation while the investigation is not in the public domain. Only the parties involved are normally allowed access to the background information of a case. However, it often happens that information is leaked by third parties, such as the media, who manage to gain access to the investigation files.
60 How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?
The advice should be to investigate agreements between countries. According to regulations in the Code of Civil Procedure, it is forbidden to investigate information that could be unlawful in a requesting country.
61 Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?
In Chile there is no ‘general’ law on secrecy or the blocking of information. However, it is possible that authorities require information to be kept secret or confidential, for example, to protect the data or identity of a person, or to protect information that may be strategic for a company.
In addition, Law No. 20,285, which regulates access to public information, establishes the possibility that if a person requests the authorities to access information the content of which may affect a third party, the affected person may oppose the delivery of the requested documents. Further, Law No. 20,285 establishes the grounds for confidentiality or secrecy of information for which the state may totally or partially deny access to the public information it handles.
62 What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?
The risks generated in the preparation and delivery of information to the authority are similar, regardless of whether it was voluntary or mandatory.
Regarding the possibility that the information may be disclosed to third parties, Law No. 20,285 establishes grounds for which information must be kept secret by the state. The most notable of these grounds is that information may not be disclosed by the authority if it apparent that it will affect the rights of individuals, including commercial or economic rights. This is notwithstanding the right of a person to object if the authority receives a request to disclose information that affects the person.
Prosecution and penalties
63 What types of penalties may companies or their directors, officers or employees face for misconduct in your country?
There are separate sanction regimes for individuals (general regime) and for legal entities (Law No. 20,393).
Natural persons may be punished with imprisonment, disqualification from holding public office, political rights or certain professions (for example, in the field of education), confiscation of the instruments or effects of the crime, and fines.
Legal persons may be sanctioned with the penalties of dissolution or cancellation of legal personality, prohibitions from entering into agreements or contracts with the state, loss of benefits provided by the state and pecuniary fines.
64 Where there is a risk of a corporate’s suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?
Law No. 20,393 establishes the possibility for a company to have its legal entity suspended or cancelled, which means that it ceases to exist in legal terms.
Other restrictions on operations are prohibitions from entering into agreements or contracts with the state, or the loss of public benefits. These sanctions can be particularly severe if a company’s operations are highly dependent on a commercial relationship with the state.
65 What do the authorities in your country take into account when fixing penalties?
Mitigating and aggravating factors are considered as penalties for natural persons. Mitigating factors include, for example, previous irreproachable conduct, confession of the offence and substantial collaboration with the justice system for the clarification of the facts (Penal Code, Article 11). The main aggravating factors are committing the crime with malice aforethought, committing the crime for an amount of money, reward or promise, deliberately increasing the harm caused or having a prior record for other crimes (Penal Code, Article 12).
For legal persons, the penalties are decided based on the amount of money involved in the offence, the size and nature of the company, its economic capacity, the degree of compliance with the relevant regulations, the extent of the harm caused and the seriousness of the social and economic consequences that the imposition of the penalty may imply, in the case of state companies or companies that provide a public utility service (Law No. 20,393, Article 17).
Resolution and settlements short of trial
66 Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?
Yes, within the criminal process there is a conditional suspension of proceedings by which an ongoing criminal proceeding against a company may be suspended if it complies with certain conditions imposed by the judge, such as paying fines, rendering a service in favour of the community, or implementing a criminal liability compliance programme.
In other types of administrative sanctioning procedures, a company can enter into agreements with the authority to suspend a sanctioning process. A paradigmatic case of this type of agreement is the antitrust leniency proceeding, a tool that allows colluding companies to self-report to the authorities with the expectation of reductions in fines or exemption from liability.
67 Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?
No, Chilean law does not contemplate a specific confidentiality statement regarding criminal proceedings against legal entities.
However, if a company has admitted certain crimes to the National Economic Prosecutor’s Office, the natural persons involved in the facts cannot be sanctioned by the criminal justice system. In this situation, the information provided by the company is confidential and is known only by the National Economic Prosecutor’s Office, without the rest of the parties involved in the investigation being aware of it until formal proceedings are initiated. However, this exemption from criminal liability is applicable only once the judicial procedure of competition has been finalised.
68 Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?
Companies are required to consider the criminal conduct they have committed, the penalty to which they are exposed (the agreement may impose less harmful consequences than a sanction) and, above all, the possibility of being sued for damages by consumers or the entities affected by the criminal conduct. There are several liability possibilities that could arise from the same types of conduct.
69 To what extent do law enforcement authorities in your country use external corporate compliance monitors as an enforcement tool?
There are currently no provisions for an external compliance monitor to enforce the law.
However, draft laws issued by Congress (Nos. 13,204 and 13,205) will introduce the sanction of ‘supervision of the company’ to the list of sanctions for legal entities. This sanction will require that the legal person be supervised by a monitor appointed by the court, who will oversee the organisation to ensure that it develops, implements or effectively improves an adequate crime prevention system and will maintain control of the development, implementation or improvement for a certain amount of time.
70 Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?
In the Chilean criminal system, all participants in proceedings are allowed to have access to the authorities’ files.
This also applies within the competition process, where claims by private actors are also permitted.
In other types of sanctioning procedures, in general only the respective sectoral authority has the ability and competence to investigate and sanction companies, without private parties being able to be involved in the process.
Publicity and reputational issues
71 Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.
Under the criminal procedure, in general a prosecutor’s files are confidential and may not be disclosed to third parties outside the proceedings (Code of Criminal Procedure, Article 182). Only those involved in the case, who in general are the Public Prosecutor’s Office, the perpetrator, the victim and the plaintiffs, may have access to the prosecutor’s files.
However, it is possible that even those involved in the case may not have access to the prosecutor’s files, if the prosecutor decides to declare the secrecy of certain documents. This occurs if it is necessary to ensure the effectiveness of the investigation (usually for a 40-day period, which may be extended).
Once a case is submitted to the court, the principle of publicity applies as a general statement, so any person may have access to the background information of the judicial process. However, it is common for a prosecutor not to deliver all the investigation files to the court, and so third parties outside the proceedings will not be able to access all the files.
72 What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?
It is common for companies to take measures to manage communications about incidents or issues that may arise. In Chile, there are entities known as strategic communication agencies, which are in charge of working with companies to prepare a strategy to manage their crises in terms of communications.
73 How is publicity managed when there are ongoing related proceedings?
From the compliance point of view, the reputational factor is fundamental for a company and is considered an element that increases the risk of certain types of conduct. This includes investigations and sanctions against a company or its employees.
The common recommendation is to separate or suspend workers under investigation, and in terms of publicity, the company should demonstrate that it has a firm commitment to compliance by performing acts that demonstrate this commitment to its stakeholders without giving further publicity to the controversy already generated. This involves, for example, running advertising campaigns that demonstrate the company’s ethical and moral principles. To this extent, it is essential to have contracted a strategic communications agency.
Duty to the market
74 Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?
It is not mandatory for companies to disclose the acts or contracts they negotiate, since these are private information.
However, in general, if it is a company that has an obligation to report to the Financial Market Commission (CMF), once an agreement is reached and even if this agreement has not materialised, the negotiation must be reported to the CMF and to the market when it is an essential fact (i.e., a fact that is relevant about the situation of a company and its business, such as any important information about making investment decisions).
Notwithstanding the foregoing, for agreements entered into with authorities in sanctioning proceedings, in general these agreements should not be disclosed since the authority normally has the discretion to go ahead with the agreement or not (for example, the Public Prosecutor’s Office in criminal proceedings). Therefore, it is not possible to disclose an agreement if it is not formalised and has not been made public through the formal channels that have been provided for it, since it may affect the market. In this case, the agreement, if so decided by the authority, may be rendered ineffective.
Environmental, social and corporate governance (ESG)
75 Does your country regulate ESG matters?
In 2021, the Financial Market Commission (CMF) published a regulation that incorporates information requirements on sustainability and corporate governance in the annual reports of companies (CMF, Regulation No. 461). This regulation only applies to entities supervised by the CMF, such as banks, insurance companies, fund managers and issuers of publicly offered securities, among others.
The purpose of the regulation is for companies to report on the policies, practices and objectives adopted in ESG matters. The regulation requires companies to report, among other things, how they integrate a sustainability approach in their business, and how they incorporate environmental (especially climate change), social and human rights issues in their different assessment processes and strategic definitions. In addition, entities must designate a responsible unit that is in charge of these matters.
76 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address ESG matters?
However, there are some draft laws on hold that address sustainability, environmental and governance issues. For example, draft law No. 14667-21, currently being processed in the Chamber of Deputies, proposes the introduction of elements of economic and social sustainability for fishing and aquaculture activities in Chile into the current regulation.
77 Has there been an increase in ESG-related litigation, investigations or enforcement activity in recent years in your country?
Although the CMF’s Rule No. 461 on ESG issues has not led to any investigation or sanction by the authorities to date, there have been several criminal cases concerning ESG issues in Chile. There has been litigation regarding the effects of several sources of contamination in an urban area (the Quinteros case), which led to the cessation of operations by industries in the city, including a refinery owned by Codelco, the main copper company in Chile.
78 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?
The main regulatory change expected is the enactment of the Economic Crime (Transparency and Enforcement) Act 2022 Nos. 13,204 and 13,205. More than 90 economic crimes will be introduced to Law No. 20,393, which regulates the criminal liability of companies. This represents a great change with respect to the current regulation, which only contemplates 16 crimes for which companies can be criminally sanctioned.
In addition, the system for attributing criminal liability to legal entities will be modified, establishing a less demanding system. The legislator looks forward to recognising the legal person as a ‘criminal platform’ that can be used by executives or directors for illicit activities.
In addition, the regulation of compliance programmes will change, as it is fundamental that companies adopt crime prevention systems in accordance with their structure and operations, and that allow for the effective prevention of crime (i.e., a requirement for the suitability of the compliance programme).
Finally, a new system of sanctions is to be established, highlighting the supervision of the legal person and a new regime of day fines. This new regulation will bring about a great change in companies, since the large number of crimes the new system contemplates and the system of attribution of criminal liability will require companies to be even more cautious in their operations to avoid the risk of being involved in criminal cases.
 Rafael Collado González is a partner, Lucía Álvarez Galvez is a director and Josefa Zamorano Quiroga and Camilo León Millones are associates at FerradaNehme.