Basham, Ringe y Correa on key white-collar and fraud offences in Mexican law
Basham, Ringe y Correa SC is a full-service law firm with a strong presence in Latin America and is the Lex Mundi representative for Mexico. The firm’s clients include prominent international corporations, many of them on the Fortune 500 List, medium-sized companies, financial institutions and individuals. Basham’s preventative and strategic consulting in all law practice areas allows the firm to offer its clients effective, complete and timely solutions to their concerns. The firm’s in-depth knowledge of the international as well as the domestic market gives it the solid base and perspective needed to offer fully integrated and tailored solutions to every client. The firm’s lawyers actively participate in worldwide associations, as well as in international transactions, something that has promoted the exchange of information and experience. Basham, Ringe y Correa is aware that each client requires objective counselling, experience and professionalism. The firm’s lawyers are well-known leaders in their respective fields of specialisation and are committed to providing legal services at the highest standards of quality.
Corporate criminal liability
Mexican law establishes that legal entities may be held liable for the intentional or culpable crimes executed by their representatives, members or administrators on their behalf, for their benefit or using the means provided by such entities. According to the Mexico City Criminal Code, the offences executed by the staff under the command of the individuals above-mentioned may hold liable the legal entity if there was no due control on them and such offence was executed because of the entity’s corporate purposes. It is important to point out that such liability is autonomous in relation to the liability held by the individual who perpetrated the offence.
In case of mergers, conversions or spin-offs, the legal entity will still be held liable for the offence committed. In such context, the liability will be adjusted considering the agreement held by the legal entity found responsible for the offence. Furthermore, in the event of apparent dissolutions, criminal liability is not extinguished when the entity continues with its economic activity, while maintaining a substantial identity of its suppliers, clients or employees.
Legal entities found liable for a crime shall be sentenced to one or several of the following sanctions: fine; confiscation of the instruments, objects or the proceeds of the crime; publication of the sentence; and the dissolution of the entity. In order to impose the sanction to a legal entity, the judge must weigh, among others, the repercussion of the failure to implement the organisation’s control mechanisms, and/or the non-compliance of legal provisions and their enforceability to act in accordance with the law. However, it is an extenuating cause of criminal liability if the legal entity co-operates throughout the investigation by providing new and decisive evidence, or if such legal entity establishes, before the oral trial stage, effective measures for preventing or discovering offences which, in the future, could be executed inside of such legal entity.
Criminal company law and corporate fraud
In federal jurisdiction, legal entities could be held liable for certain crimes, which are provided in the Federal Criminal Code. Some of the offences for which legal entities can be held criminally liable, or also be victims, are:
- Fraudulent administration, which consist in intentionally damaging another person’s property, perpetrated by anyone who is responsible for its management and has the purpose of attaining a pecuniary gain.
- Creditor fraud, committed by the merchant declared in bankruptcy who executes any act tending to provoke or exacerbate the generalised breach in the payment of their legal obligations.
- Tax fraud, carried out by anyone who entirely or partly omits the payment of any government contribution or earns an unlawful benefit by taking advantage of inaccuracies made by the tax authority. Such offence is also perpetrated by the taxpayer who attaches false deductions or claims a lesser income than actually gained in their tax return. It is also considered tax fraud to fail to submit tax returns for more than 12 months while refraining from paying the correlating tax.
- Money laundering, which consists in handling or managing money or objects that proceed from a criminal offence. Also, it will be considered as money laundering hiding the origin or ownership of those resources when the person in charge of their administration is aware that such resources constitute the result of a criminal offence. It is important to point out that such resources will be treated as illegal if there is no evidence of the legal origin and there is enough evidence that such resources are the proceeds of a criminal offence.
- In accordance with the Federal Law to Prevent and Detect Operations with Illegal Resources, it is imperative that financial institutions enforce procedures for hindering and identifying money laundering; for identifying their clients; and for disclosing transactions when compelled to do so by law or the competent authority. The financial institutions are bounded to designate a compliance officer and a communication and control committee; to enforce a manual on money laundering prevention and an annual training programme related to these concerns; to provide an annual audit report to the National Banking and Securities Commission; and to have automated systems for identifying any relevant, unusual or vulnerable transactions.
- In relation to environmental matters, it is considered an offence to damage or place at risk the environment by carrying out operations using hazardous materials or substances; illegal logging; the capture and transport of endangered aquatic species; emissions into the atmosphere and damaging it or putting it in peril. The emissions which are provided for this offence are noise, vibrations, thermal or light energy and the disposal of contaminating waste into the soil, subsoil or water bodies.
- Regarding intellectual property offences, in copyright matters, to intentionally distribute and commercialise unauthorised copies of any type of copyrighted work, with the purpose of commercial speculation. Regarding industrial property criminal offences, to manufacture, commercialise, import or grant raw supplies for producing products, while being aware that such objects flaunt counterfeited trade marks.
- In regard to crimes committed through a computer or a computing system: anyone who, without authorisation or lawfulness, divulges a secret or a private communication acquired due to the offender’s employment and provokes a damage or loss. Also, anyone who causes the loss of data stored in a computing system which has been protected by any security mechanism shall be held liable. It is important to point out that the punishment will be enhanced if the loss of data is provoked by someone who has authorisation for accessing the computer system. Sanctions may vary depending on the offence and its severity.
Francisco Tiburcio has been a partner in the criminal law practice at Basham, Ringe y Correa since 2000. His main areas of specialisation are criminal law, trial practice and counselling on crime prevention. He has more than 32 years’ experience in criminal practice, mainly in white collar, intellectual property, tax, health and environmental law crimes, as well as areas related to mining and industrial security. He advises both domestic and foreign corporations, many of which are Fortune 500 companies. He has participated as speaker in numerous business forums and conferences on strategies and methods for crime prevention. He is an associate of Frauded and Lex Mundi and has published several books on Mexican criminal law as well as various articles in specialised journals. He has a PhD from Universidad Panamericana, Mexico City.
Alejandro Catalá has been a partner at Basham, Ringe y Correa since 2006 and is currently based in Mexico City. His most important practice areas are criminal prevention counselling and civil and criminal litigation. He is a member of the firm’s executive committee specialising in white-collar criminal law advice to leading global and Mexican corporations. He is a regular speaker on criminal law at various business forums and associations engaged in fighting criminal activity and vice-president of the intelligence and risk management commission of the International Chamber of Commerce.
Gilberto Valle is a partner in the Querétaro office of Basham, Ringe y Correa who specialises in criminal law and the corporate prevention of criminal conduct. He is a trial lawyer and consultant. He has particular experience in criminal law litigation, representation of victims and injured parties in criminal investigations and prosecutions (at both the local and federal level), corporate security and due diligence investigations associated with anti-corruption compliance, design and implementation of compliance policies including prevention of criminal conduct programmes and corporate exposure to criminal liability. He is a member of the US-Mexico Bar Association.