compliance

Criminal compliance, an essential plan in companies

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The purpose of compliance must be understood as the privatization of the fight against corruption, given that the administrative bodies of companies must adopt and effectively implement, prior to the commission of a crime, organizational and management programs that include the appropriate monitoring and control measures to prevent crimes of the same nature or to significantly reduce the risk of their commission.    

An illustrative case that boosted the origins of compliance was that of Arthur Andersen when it was sentenced by the federal courts in Houston on Saturday, June 16, 2002, for crimes of obstruction of justice, and destruction and alteration of documents related to the Enron bankruptcy and irregularities committed by that corporation, condemned in the first instance one of the largest companies in the sector in the world will be deprived of being able to continue exercising its audit and advisory functions for companies registered on the U.S. stock exchange. This led to the cessation of almost all its activities. From then on, Arthur Andersen’s companies in the different countries were dissolved and their professional teams merged or were absorbed by other companies in the sector.

For such reason, it is necessary to have an effective plan of self-regulation in the companies, in order to avoid their criminal liability as a legal entity, with the added bonus that they will positively improve the prestige of the companies that have it, since they will be considered part of the good corporate citizens of the world. 

The criminal compliance is that plan of measures and practices that companies must adopt to reduce the risk of being victims of criminal actions, or in its defect to know how to act in case they occur to the ends that their criminal responsibility can be excluded as long as the system is effective.

Criminal compliance is defined as a series of preventive tools whose purpose is to avoid criminal sanctions that will make a company liable. 

According to the World Compliance Association, criminal compliance is “a set of procedures and good practices adopted by organizations to identify and classify the operational and legal risks they face and to establish internal prevention, management, control and reaction mechanisms against them“.

Among the crimes that a company may incur in, we highlight crimes against the public treasury, punishable insolvency, corruption in business, money laundering, crimes against the market and consumers, among others. In view of the progress in the legal world, the specificity in regulations and the repercussions that the implications of these crimes have in the life of a company, criminal compliance has become an indispensable plan in business activity and not a voluntary option of certain companies.

Part of the risks to be prevented when creating the criminal compliance program are those that entail consequences such as the damage to reputation, the imposition of important fines and sanctions, business losses due to non-executable contracts or the exclusion of public bids or subsidies, sentences that also decree the dissolution, transformation, absorption or spin-off or extinction of the company.

The main reasons why it is important to have this system of regulatory compliance are

  • Minimization of legal and criminal liability of companies
  • It is a detector to clearly identify bad practices of managers and employees.
  • Organizes activities, considering the relevant regulatory frameworks.
  • Generates confidence in investors, staff, and customers, due to the compliance with international standards.
  • Increases the reputation, prestige, and image of the company.
  • Offers a competitive advantage in public and international bidding.
  • Increases transparency and ethics in companies.
  • It is a cause of exclusion or mitigation of the criminal responsibility of the legal person, always its system is effective.

That is why in Alan Aldana & Abogados, in addition to encouraging our clients to be considered good corporate citizens of the world, we have accredited specialists to implement compliance programs in your company, to perform technical analysis to verify the execution and effectiveness, as well as to perform the required periodic audits. 

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