Zero Tolerance

Azerta's Public Affairs department has analyzed the bill that strengthens regulations on corporate criminal liability, systematizing economic crimes and environmental offenses.

31 May 2023

In the middle of this month, Congress passed a law project that identifies economic crimes and offenses against the environment, modifying various legal frameworks that define infractions against the socio-economic order. The initiative, which will come into effect one year after its enactment, aims to ensure that so-called “white-collar crimes” carry penalties commensurate with the social harm they cause. Therefore, it establishes new criminal responsibilities for companies, including religious entities, political parties, and state universities, among others.

Law 23.393, published in 2009, establishes the criminal liability of legal entities and has given a boost to corporate compliance policies in the country. It states that companies must take responsibility for the risks generated by their activities. Originally, only three crimes were determined: bribery of public officials, money laundering, and financing of terrorism. However, over time, the catalog of offenses has been expanded to include the following:

  • The offense must be committed by the owners, directors, top executives, representatives of the companies, individuals carrying out management and supervisory activities, or those under the direct direction or supervision of the aforementioned individuals.
  • The offense must be committed for the benefit of the legal entity.
  • The commission of the offense must result from a failure to fulfill the duties of management and supervision.
  • The duties of management and supervision of the company are fulfilled by implementing and applying a Crime Prevention Model (MPD).

What the future law brings: The Bill approved by Congress introduces several modifications to the system of attributing criminal liability to legal entities, highlighting the following aspects:

  • Expansion of the scope of application: The law broadens the scope of legally responsible entities, encompassing a wider range of organizations and institutions.
  • Expanded catalog of economic crimes: The bill includes an extensive list of over 200 economic crimes subject to criminal liability.
  • Definition of new sanctions and a scheme of alternative penalties for economic crimes.
  • Deepening of criminal liability for legal entities, making them responsible for any economic crime occurring within them, previously limited to specific crimes.
  • Changes to the system of mitigating factors, eliminating the concept of irreproachable previous conduct.
  • Establishment of a differentiated system for serving sentences, eliminating supervised release.

One of the main modifications established by the project is the extensión of responsibility to the following entities:

  • Public companies created by law.
  • Companies, societies, and state universities.
  • Political parties.
  • Religious legal entities of public law.

For a company to be criminally liable, the following conditions must be met:

  • The offense must be committed by or with the involvement of a natural person holding a position in the company or a third-party intermediary.
  • The commission of the offense must be favored or facilitated by the lack of implementation of an adequate crime prevention model.
  • The bill establishes the autonomy of the legal entity and the responsibility of natural persons.
  • The regulation of the Crime Prevention Model (MPD) is made more flexible, allowing more room for implementation by the legal entity, although with higher expectations of effectiveness.
  • The individuals responsible for implementing protocols to prevent and detect criminal behavior are referred to as “Responsible Subjects”.

The bill also increases the sanctions that legal entities may face and excludes the possibility of applying the alternative penalty of supervised release to convicted entities. Thus, the possible penalties that can be imposed after the law’s enactment are:

  • Partial confinement at home.
  • Partial confinement in a special facility.
  • Actual imprisonment.
  1. Changes are made to the imposition of fines, moving from a fixed scheme to a system of day-fines.
  2. The maximum fine that can be imposed on a legal entity by the court amounts to 600 day-fines, equivalent to US$ 230 million.
  3. The figure of Supervision of the Legal Entity is introduced, which can be determined by the court due to the nonexistence or serious insufficiency of the crime prevention system.