White-Collar Crime 2020 Comparisons

Last Updated October 20, 2020

Law and Practice

Authors



Basham, Ringe y Correa S.C. 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 types of law 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.

Among other ways, offences in Mexico can be classified in:

Whether They Require Pre-trial Detention

Crimes which require pre-trial detention (officious detention) are established in the Mexican Constitution. The pre-trial judge must order this precautionary measure in cases of crimes of:

  • sexual abuse or violence against minors and rape;
  • organised crime;
  • murder and femicide;
  • kidnapping;
  • human trafficking;
  • burglary (also robbery);
  • the use of a social programmes for electoral purposes;
  • corruption;
  • theft of cargo;
  • crimes involving hydrocarbons, petroleum or petrochemicals;
  • crimes related to the enforced disappearance of people;
  • crimes involving firearms and explosives intended for the exclusive use of the Army, Navy and Air Force;
  • crimes against homeland security and drug trafficking.

Whether They Are of Federal or State Jurisdiction

In Mexico, besides the Federal Criminal Code (FCC), there are local criminal codes for each one of the 32 Mexican states, including Mexico City. Thus, legal entities may be prosecuted for offences executed at both federal and state levels.

Independently of the level, the procedure which applies for both is the one provided in the National Criminal Proceedings Code (NCPC). This chapter will be centred on the provisions contained in the FCC and, occasionally, the provisions of the Mexico City Criminal Code.

A crime falling under federal jurisdiction will be investigated, prosecuted and punished by federal authorities, namely, by the Federal Attorney General's Office (FAGO) and by the Federal Judicial Branch (FJB).

According to FJB organisational law, federal crimes are those:

  • provided in federal laws and international treaties;
  • executed abroad but produce effects in Mexico;
  • committed against the Federation;
  • either perpetrated or suffered by a public servant or federal employee in relation to their functions;
  • executed against any federal public utility;
  • which preclude or hinder the exercise of any of the Federation’s duties.

All other crimes are considered within the states’ scope of jurisdiction.

Executed Intentionally (Dolus) or Culpably

An offence is committed with dolus when the offender is aware of the constituent elements of the offence and intends the performance of that criminal conduct.

An attempted intentional offence is performed when the will to perpetrate a crime is externalised by carrying out all or some of its constitutive elements, or when the acts that could avoid it are omitted, and the crime is either not completed or avoided for any reason beyond the offender’s will.

An offence is culpable, when whoever is executing the action:

  • has not foreseen that an offence will occur, despite it being foreseeable;
  • does not anticipate the possible commission of the offence and trusts that it will not occur; or
  • when the offender has not complied with the duty of care, according to the circumstances and the offender’s personal conditions.

According to Their Form of Perpetration

The offence is considered as:

  • instantaneous, when at the moment of its performance all of its constituent elements were carried out;
  • permanent, when its execution is prolonged over time;
  • continued, when the same offender, having the same purpose, carries out several offences against the same victim.

Whether They Are Prosecuted Ex Officio or through the Petition of the Aggrieved Party

It is mandatory for a public prosecutor to initiate an investigation once he or she has received information about the perpetration of an offence, which shall be prosecuted ex officio, and to carry out all necessary acts of investigation acts to clarify the facts.

For the rest of the offences, it is necessary that the victim files a criminal complaint in order to request the prosecutor to initiate an investigation and to carry out all necessary acts of investigation.

Mexican criminal law establishes that the mere course of time is sufficient for extinguishing criminal actions and their sanctions. The deadline for the limitation period is doubled if the offender is located abroad and, because of this circumstance, developing an investigation is not possible. Generally, the limitation period begins to run:

  • for instantaneous offences, at the moment when the offence was perpetrated;
  • for attempted crimes, immediately after the last act of execution was executed;
  • for continued offences, just after the last act was performed;
  • for permanent crimes, after the cessation of execution.

If a prior judicial resolution is required to filing a criminal action, the limitation period begins to run after that resolution has been issued.

Limitation Period for Offences Punished by Imprisonment

The limitation period is equivalent to the mean average imprisonment terms provided by law, never being less than three years. If multiple crimes occur, the limitation period for bringing a criminal action is the one applicable to the offence meriting the greatest penalty.

Limitation Period for Offences Which Require a Criminal Complaint

In this case, the limitation period for criminal action is one year, starting to run on the day in which the person legitimised for filing the complaint is aware of both the offence and the offender’s identity. Outside this circumstance, the limitation period is three years. Once the complaint has been duly filed in time, the limitation period will be equal to the mean average of imprisonment terms.

The limitation period will be interrupted by the acts of investigation practised by the FAGO. Nonetheless, the interruptions shall not extend the limitation period beyond one and a half times.

Limitation Period for Enforcing Sentences

The limitation term for enforcing a sentence over a fugitive is equal to the imprisonment term imposed plus a quarter of that time, which starts to run on the day that the convicted person escaped from justice. In this specific matter, the limitation term will never be less than three years. This period is interrupted by the arrest of the convicted person, even if initially it was for a different offence.

If only a fine or other penalty that is different from imprisonment was decreed, the limitation period is equal to one year and begins to run after the final resolution is issued by the court.

There is no specific law in Mexico which has extra-territorial reach at all times. However, the law according to the FCC establishes when a crime perpetrated abroad produces effects in Mexico and, therefore, may be investigated, prosecuted and sanctioned within the country.

The FCC shall apply to crimes executed abroad when:

  • they produce or intend to produce effects in Mexico;
  • a treaty on extradition matters imposes upon Mexican authorities the obligation to prosecute;
  • committed in Mexican consulships or against their employees if not prosecuted by the host country’s authorities.

Continued crimes perpetrated abroad which still produce effects within Mexico shall be prosecuted by the latter’s authorities.

Offences executed abroad by Mexicans or against Mexicans shall be prosecuted in Mexico only if:

  • the accused is located in Mexico;
  • the accused has not been convicted yet in the country where the crime was perpetrated;
  • the infringement is considered as a criminal offence both in Mexico and in the country where committed.

In the same way, offences shall be prosecuted by Mexican authorities if executed in:

  • Mexican embassies and legations;
  • Mexican vessels located on the high seas;
  • Mexican warships or merchant ships which are in a foreign port or foreign territorial waters;
  • Mexican or foreign aircraft which is in either Mexican or foreign territory, airspace or territorial waters.

In federal matters, legal entities only could be found liable for the offences provided in the FCC Article 11 bis catalogue. If a member, administrator or representative of any private legal entity perpetrates an offence using the means provided by that legal entity and with the intent to carry out the offence, or on its behalf, once the lack of organisational due control by the legal entity is proven, the judge shall impose upon that entity one or several of the following sanctions:

  • from six months to six years of suspension of its activities;
  • from six months to six years of suspension of activities of certain establishments;
  • prohibition for carrying out activities relevant to the offence perpetrated;
  • banning its participation in public bids or contracts;
  • judicial intervention to safeguard its employees’ rights;
  • dissolution of the legal entity if considered necessary to safeguard public security.

The offences which could result in criminal liability for legal entities are:

  • terrorism;
  • illegal use of air traffic utilities;
  • offences against health;
  • corruption of minors;
  • influence-peddling;
  • bribery;
  • coin forgery and alteration;
  • acts against national consumption and wealth;
  • trafficking of minors;
  • trading stolen objects;
  • auto theft;
  • fraud regarding the administration and/or care of a third party’s property;
  • concealment;
  • operations with illegal resources/money laundering;
  • offences against the environment;
  • offences against copyrighted works;
  • trafficking firearms intended for army use;
  • human trafficking;
  • organ trafficking;
  • kidnapping;
  • smuggling;
  • tax fraud;
  • offences against industrial property;
  • offences related to banking law and the Mexican financial system;
  • securities-market-law crimes;
  • commercial-insolvency-law crimes;
  • handling or producing chemical elements without authorisation;
  • business in (or illegal possession of) hydrocarbons.

The imposition of sanctions on the administrator or representative (either de facto or de jure) is conducted independently of the liability attributed to a legal entity. The FCC does not provide a priority for investigating and punishing either the person or the legal entity. In order to attribute criminal liability to directors, administrators or even the legal entity itself, their participation in the offence must be proven.

Furthermore, a legal entity’s criminal liability is not extinguished in the case of mergers, conversions or spin-offs. In such circumstance, the penalty may be assessed according to the agreement made with the legal entity liable for the offence. Likewise, criminal liability is not extinguished in the event of apparent dissolutions, when the entity in question continues its economic activity and substantially maintains its identity.

According to the provisions of Mexico City’s criminal code, it is mandatory for the judge to annul the merger of a criminally liable legal entity, so that offences do not go unpunished. Currently, several state criminal codes have also established which crimes can be committed by a legal entity. Nonetheless, there are states whose criminal codes provide specifically that legal entities may never be found liable for criminal offences, such as in Queretaro state.

It is mandatory for the public prosecutor to request, during the trial, damage restitution in favour of the victim. In order to guarantee the damage restitution, the victim or the prosecutor can request to the judge to seize assets and/or bank accounts and/or securities within the financial system.

If the offender is bonded to trial, the victim has the right to appear at the trial and to request to quantify and impose damage restitution, among other things. After the trial ends, the court will set a date for a hearing to quantify economic compensation for the damage caused.

In Mexico, class actions are restricted to consumer protection and environmental damage.

It is important to point out that the majority of the criteria discussed in 1 Legal Framework were issued by federal courts during the 1980s and 1990s. Currently, there are no new relevant criteria regarding a legal entity’s liability in relation to white-collar crimes.

Notwithstanding, the Mexican Constitution provides that private communications are inviolable. Thus, secondary law will criminally sanction any action which jeopardises the privacy and freedom of communications, unless access to such communications is voluntarily given by any of the individuals involved in them. Based on this, recent decisions of the Supreme Court have established that:

  • when intercepting emails, it does not make a difference who owns the computer used for that purpose;
  • the interception can be done through any means in which the communication was held; 
  • the interception occurs when, without the consent of the computer’s user or owner, the password to access it is violated;
  • if an individual knows a third person user’s password and does not have consent to access his or her private account, such conduct is considered a breach of privacy and, consequently, a violation of communications; and
  • the breach does not have to be carried out at the same time as the communication takes place, it can be done by illegally accessing to the data storage device.       

Concerning new recent law, the Federal Legislative Branch (FLB) has approved a law focused on tax fraud, regarding the issuance of forfeited billings or invoices, considering such offences as a form of organised crime (an offence which requires pre-trial detention (officious)).

In addition, the FLB has issued the Federal Law on Protection of Intellectual Property, which will be in full force and effect on 5 November 2020. This law modifies the criminal offences catalogue of its predecessor by suppressing some of them and adding new offences and new constituent elements for certain offences related to counterfeited trade marks and appellations of origin, and the illegal disclosure and/or misappropriation of trade secrets. Also, the FLB has modified the Copyright Law and the FCC in order to add new offences related to the alteration or breach of electronic security systems.         

Depending on either the federal or state level of the offence, the authorities empowered to investigate white-collar offences are the FAGO and the Attorney General offices of each one of the federal states, respectively. Furthermore, there are specialised units at the state and federal level in charge of investigating certain white-collar crimes, as well as judges and courts specialised in criminal matters.

An investigation is initiated by filing a denunciation, complaint or other similar motion, which can be done by any means. It must contain the complainant’s general data, the narration of relevant facts and details of those who committed or witnessed the offence. Criminal complaints can also be filed through an appearance before the public prosecutor or the police.

Regarding ex officio prosecutable offences, any communication held between anybody and the public prosecutor is sufficient for initiating an investigation. If the prosecutor is aware of the probable commission of a criminal offence which requires a complaint to be filed, or any similar requirement, it is mandatory to inform the victim of this situation.

The prosecutor has broad powers to obtain information or evidence for supporting the investigation. There are certain acts which mandatorily require judicial authorisation in order to carry them out, especially those acts of investigation that affect human rights, such as search warrants, raiding a company and seizing documents, or wire-tapping.

Search-warrant requests must specify, among other things, the reasons why the search is necessary, as well as the place, documents, objects and/or the person to be sought. The judge must resolve the search-warrant request within six hours after receiving it.

Prosecutors may carry out other investigative acts without needing judicial authorisation (eg, interview of witnesses). These powers also cover the faculty for demanding that an employee, officer and/or director of a company under investigation submit to questioning.

Every person or company has the obligation to provide all the information and documents requested by the public prosecutor, the police and/or the judge during the course of an investigation. The prosecutor may summon and force anyone to appear in order to be interviewed. Furthermore, if the prosecutor’s orders are not complied with, a fine or an arrest for up to 36 hours shall be imposed.

Although every person has the duty to inform the authorities that an act which would probably be considered an offence has been committed, there is no legal obligation for companies to conduct internal investigations into criminal matters.

Regarding offences executed within Mexico City’s General Attorney’s competence, providing new and decisive evidence to the investigation or establishing effective measures for preventing and uncovering future offences which could be executed under the company’s scope of activities before the trial stage starts are criminal liability mitigating factors. Thus, conducting internal investigations could be beneficial if a company is being prosecuted.

Outside the criminal legal framework, the General Law of Administrative Responsibilities provides that, in order to determine the amount of a fine levied against a legal entity, it will be taken into account if that company has an integrity policy which must necessarily have effective control, surveillance and audit systems (which verify compliance with the integrity standards) and adequate reporting systems (both within the company and to the competent authorities).

Mutual Legal Assistance

Mexico is party to legal assistance and cross-border co-operation treaties with 31 countries. Submitting evidence, carrying out notifications, ordering expert opinions, requesting damage restitution proceedings, search warrants and property seizures are some of the actions a party may request of another.

It is important to point out that requests for assistance in carrying out search warrants, home searches, property seizures, wire-tapping, or any other coercive or human-rights affecting measure, will only be addressed if the offence under investigation is also considered an offence under the jurisdiction of the requested party.

Nonetheless, with regard to the treaty held between Mexico and the USA, even if the offence under investigation is not considered as such by the requested party, the practice of a seizure, for example, may only be addressed if the relevant judge orders it.

International legal assistance, in almost all cases, may be denied if:

  • granting it is contrary to the requested party’s legislation;
  • political or military offences are the matters under investigation;
  • the accused party is being prosecuted for offences related to race, religion, sex, nationality, political opinions or personal or social conditions;
  • granting it is contrary to the non bis in idem general principle of law (res iudicata); or
  • granting it is hazardous to the requested country’s sovereignty.

However, if a person summoned to testify is located abroad and he or she invokes immunity or any type of impediment in accordance with the requesting party’s law, this information must be provided by the requested country.

Also, if assistance is requested for notifying a person or expert located abroad who must appear before Mexican authorities, no penalty shall be imposed because of the failure to appear.

The NCPC imposes on public prosecutors the obligation to grant international legal assistance to foreign prosecutors or judges who request it in relation to the investigation, prosecution and sanction of offences perpetrated within their jurisdiction. If there is no international treaty held in these matters, Mexico will provide the assistance on the condition of reciprocity, meaning that the requesting country expresses its willingness to co-operate with Mexico in the future.

Extradition

Mexico has held treaties on extradition matters with 35 countries. Extradition shall be granted for offences either under investigation or trial, considered as such by both parties. Furthermore, it is necessary there exists a minimum imprisonment for the offence in question, which may range from one up to three years, depending on which treaty is applicable.

However, some treaties provide a catalogue which explicitly establishes for what offences extradition shall be granted. Examples of this are the treaties held between Mexico and the UK and the one held with Belgium.

In the case of white-collar crimes, the Mexico-UK treaty’s catalogue includes, among other offences:

  • fraud committed by administrators, members or employees of a bank or company who receive possession of a third party's personal property;
  • falsification of public or private documents and their circulation;
  • fraudulent conveyance offences.

However, the catalogue of the treaty held with Belgium includes, among other offences:

  • forgery of documents;
  • false statement by a witness, expert or interpreter;
  • bankruptcy criminal offences;
  • breach of trust and fraud;
  • bribery of witnesses, experts and interpreters.

Extradition may be denied if, among other things:

  • the death penalty is intended to be applied;
  • sanctions for political or military offences are intended to be applied;
  • the accused party is being prosecuted for discriminatory reasons, such as race, gender, religion, nationality, political opinions;
  • the offence limitation term has expired.

The Mexican International Extradition Law specifies in which situations the Mexican government may extradite an accused person to appear before the requesting country courts even if a treaty has not been held. In this case, extradition shall be granted for offences intentionally executed for which the imprisonment penalty maximum and minimum mean average is one year.

Also, the same law establishes that extradition will be denied:

  • if the claimed person has been acquitted or pardoned;
  • if the complaint has not been filed by someone who has legitimacy for that purpose, in accordance with Mexican criminal law;
  • when the limitation term for either the criminal action itself or the penalty has expired;
  • when there is a well-founded risk that the person claimed for extradition will be subjected to torture or forced disappearance.

The criminal procedure starts with the initial hearing in which the public prosecutor informs the accused that an investigation for one or more acts which the law considers as an offence is being carried out. In this hearing, the public prosecutor must mention, among other things, the charges filed against the accused, their legal characterisation and the degree of participation of the accused.

Subsequently, the public prosecutor shall request to the judge that the accused is bonded to trial. In order to grant that, it must be proven both that an act considered an offence was executed and the probability that the accused either executed it or participated in its execution. Once all parties have been heard and other constitutional requirements, the judge shall resolve if the defendant is bonded to trial.

As previously mentioned, a company can be criminally liable for crimes committed in its name, on its own behalf, for its benefit or through the means provided by the company when, in addition, it has been determined that there was a lack of due control from the organisation. The liability of a legal entity shall always be independent of the personal liability of their representatives or administrators.

Regarding anticipated ways for finishing the procedure and alternative mechanisms for concluding criminal matters, the NCPC establishes:

  • the opportunity criterion;
  • the restitution agreement;
  • conditional discontinuance of the criminal procedure.

Opportunity Criterion

The public prosecutor could grant this immunity programme in any of the following situations:

  • where the penalty for the offence under investigation is less than five years;
  • for non-violent white-collar offences;
  • if the offender agrees to appear in trial to give effective information for prosecuting a more severe crime.

It is mandatory to pay the victim’s damage restitution in advance in order to apply any such criterion.

Restitution Agreement

This alternative mechanism is held by the victim and the accused in which the latter is bounded to indemnify the former. To apply this alternative mechanism, it is necessary to obtain the approval of the prosecutor or the judge. Once the agreement is fulfilled, the judge shall decree the criminal action extinguished.

Nonetheless, this agreement cannot be applied for all offences. It can only be held with regard to the following:

  • offences which require a complaint to be filed prior to prosecution;
  • offences which permit the aggrieved party to grant a pardon to the offender;
  • culpable offences;
  • non-violent white-collar crimes.

It is mandatory for the parties to be in equal circumstances for negotiating and to establish proportionate conditions in the agreement. Otherwise, the judge or the prosecutor will not approve it. If intimidation, threat or coercion were used against one or both parties, it will not be approved either.

Conditional Discontinuance of the Criminal Procedure

This mechanism can proceed only when all of the following are fulfilled:

  • the accused is bonded to a trial related to an offence for which the penalty mean average does not exceed five years;
  • the victim has no grounded arguments to stand against it;
  • a minimum of two years have elapsed since the last fulfilment of another conditional discontinuance of the procedure (five years if the conditions were neglected).

Only the accused and/or the public prosecutor are the legitimate parties for requesting this alternative mechanism. The requesting party shall present a plan to pay damage restitution and the accused must accept the conditions imposed by the judge. After the conditions are fulfilled, the criminal action is extinguished. This mechanism has a duration ranging from six months up to three years. During this period, the offender must comply the obligations contained therein.

Some of the obligations provided in the NCPC are:

  • living in a specific place;
  • not attending certain places;
  • pro bono work;
  • any others considered necessary to safeguard the victim’s rights.

Based on the evidence offered by the prosecutor, the accused may accept being sentenced for the offences he or she is accused of in exchange for a lesser conviction only if the victim’s damage restitution has been guaranteed. Depending on the term of imprisonment provided for the offence, the reduction may range from one third up to two thirds of the minimum penalty.

This alternative mechanism may apply after the judge binds the accused to the trial. If the damage restitution has not been guaranteed, the victim can expose grounded arguments for opposing that mechanism.

Regarding white-collar offences, the main crimes for which legal entities can be criminally liable are:

  • fraud in administration: executed by a person in charge of the administration or care of other people's property who intentionally damages that property by carrying out harmful activities on that property for the purpose of obtaining economic benefits. The penalty for this offence is imprisonment for up to 12 years and a fine of up to MXN10,426;
  • operations with illegal resources – committed by those who handle money or objects which proceed from a criminal offence or hide the origin or ownership of those resources when the offender is aware that they represent the product of a criminal offence. The penalty is imprisonment for up to 15 years and a fine of up to MXN434,400;
  • any intentional act or conduct, made by a merchant declared in bankruptcy (before or after the declaration of that bankruptcy), which causes or aggravates the generalised breach in the payment of their obligations shall be punished with imprisonment for up to 12 years;
  • ordering, authorising or carrying out any activity with substances considered dangerous and causing damage to the environment (or even to put it at risk) is punished with imprisonment for up to nine years. Penalties will be aggravated if the offence is committed in a protected natural area;
  • it is also considered an environmental offence to order, authorise or make emissions into the atmosphere causing damage, or the risk of damage, to the environment. This includes noises, vibrations and thermal or light energy coming from emitting sources and the discharge of polluting waste into the soil, subsoil or bodies of water within the scope of federal jurisdiction that causes a risk of damage or damage to natural resources. Other environmental crimes include the illegal logging of trees or the commercialisation or transport of any timber-forest resource, and the capture and transport of endangered aquatic species;
  • in copyright matters, to distribute and commercialise unauthorised copies of any type of work protected by law for speculative purposes; to produce any system or device intended for deactivating security devices of a computer programme; and to record or to show movies in theatres. The penalty for these offences is imprisonment for up to ten years and a fine of up to MXN1.7376 million;
  • with regard to industrial property crimes, it is an offence to produce, commercialise, import or provide raw material for products, knowing that these objects flaunt counterfeited trade marks. The misappropriation of trade secrets with the purpose of obtaining an economic benefit is also an offence. The penalty for such offences is imprisonment for up to six years and a fine of up to MXN868,800. The FLB, as referred to in 1.6 Recent Case Law and Latest Developments, added that a counterfeit will be considered as such when a trade mark is used either identically or in a manner that cannot be distinguished in its fundamental aspects from a mark protected by law without having the corresponding authorisation and with the purpose of flaunting that counterfeit as authentic.

A sanction for up to six years of imprisonment and a fine of up to MXN8,688 is applied for influence-peddling that is committed by any person or company which causes any public servant to process illegally any public business outside the responsibilities of his or her employment. This crime is also committed by those who claim to have influence and intervene before public servants to promote the unlawful resolution of public business to obtain a benefit, without being legally authorised to intervene in such business.

Imprisonment for up to 14 years and a fine of up to MXN13,032 results from a bribery offence committed by anyone who gives, or promises to give, any benefit to any public servant, including foreign public servants, for making, or omitting to make, an act related to their functions. This offence could be executed either directly or using a third party.

Imprisonment of up to 14 years shall be applied to the counsellor, official or employee of (or anyone who directly intervenes in) a financial system-related business who receives a benefit from the client, directly or indirectly, for their participation in the processing of a loan or a service provided.

In Mexico, it is not mandatory for companies to implement a compliance programme for preventing bribery and influence-peddling offences. Nevertheless, if a company is found liable for such offences, the lack of a compliance programme evinces its responsibility. As previously mentioned, corporations will be held liable for crimes executed on their behalf, for their benefit or with resources provided by them, when their lack of a compliance programme and/or due control mechanisms is proven.

For determining the degree of participation and, therefore, the liability of legal entities, judges must assess the impact of the failure to implement organisational control mechanisms and/or the non-compliance with legal provisions, among others. Sanctions applicable to companies can be reduced if, before the perpetration of the offences, an effective crime-prevention compliance programme was implemented.

Outside the criminal legal framework, the General Law of Administrative Responsibilities provides that, for imposing administrative sanctions on a company, it shall be taken into account if that company has an integrity policy that must necessarily have effective control, surveillance and audit systems which verify compliance with the integrity standards and adequate reporting systems, both within the company and to the competent authorities, among other things.

Crimes (and their respective sanctions) related to both the Mexican financial system and companies which produce payment instruments for the exchange of goods and services which may find companies liable are as follows:

  • imprisonment for up to 15 years and a fine of up to MXN30.408 million for operating or performing acts as, among other things, an intermediary, a bank, a Mexican financial system entity, an investment company and an investment fund, without having the legal authorisation to do so. The administrators, executives, officials, employees, proxies and commissioners who carry out such operations to the public could also be found individually responsible for such offences;
  • imprisonment for up to 15 years and a fine of up to MXN30.408 million will be imposed for providing to a financial institution false information regarding the amount of assets and liabilities of a person or company, in order to obtain a loan or a service which results in bankruptcy or property damage for that financial institution;
  • imprisonment for up to 15 years and a fine of up to MXN30.408 million is imposed on those who do not allot the loan resources, or the object of the service provided, to the agreed purpose, if it results in a breach or damage to the financial entity or if that purpose was decisive for granting that credit or providing that service. The same penalty shall apply to those who use the resources obtained for a different purpose from the one agreed upon, if those resources came from a public policy programme for economic development or from international organisations;
  • the same penalty described in the preceding two paragraphs will apply to directors, officers, or employees who forge, simulate or knowingly carry out operations resulting in economic damage to the financial system entity, or to people who file false financial statements, in order to enable them to gain access to storage in public bonded warehouses;
  • the penalty mentioned also applies to anyone looking for a loan who presents a financial appraisal showing a value that does not accord with reality so that the real value of the asset is lower than the loan amount, resulting in a damage to the financial system entity;
  • regarding payment instruments issued by financial entities and payment instruments issued by non-bank merchant companies for the acquisition of goods and services, imprisonment for up to nine years and a fine of up to MXN26.064 million shall be imposed on those who, without consent or legitimate cause, produce, reproduce or distribute such payment instruments or their owners’ personal information; the same sanction will be applied to those who acquire such payment instruments knowing of the circumstance previously described;
  • imprisonment for up to nine years and a fine of up to MXN26.064 million shall be sanctioned for illegal access to the electronic systems of the Mexican banking system to obtain financial resources or confidential information, or to alter intentionally the operating mechanisms of ATMs;
  • imprisonment for up to 15 years and a fine of up to MXN4.344 million shall be applied for arranging or ordering the undue disposition of financial entities' clients’ resources. The imprisonment shall also apply to the managers and employees of a stock market intermediary, or commissioners who use resources provided by a client for a purpose different from the one agreed upon;
  • imprisonment for up to ten years shall be imposed on the keepers who, in representation of a public bonded warehouse, directly or indirectly, make an undue disposition of the deposited merchandise or provide false data related to the warehouse's operations or its existence; the same penalty will apply to those who do not allow the disposition of the merchandise to those who have the right to do so or who prevent access to it;
  • imprisonment for up to 15 years shall be imposed on members of the board of directors, officials or employees of a financial entity who offer money or any other benefit, either directly or indirectly, to a public servant of the National Banking and Securities Commission for making or omitting to make an act related to his or her functions;
  • imprisonment for up to two years and a fine of up to MXN26,064 shall be sanctioned against directors, managers, members of the board of directors, external auditors and commissioners of auxiliary credit organisations and/or currency exchange houses, who carry out operations where such persons, or their relatives, are debtors;
  • imprisonment for up to 15 years and a fine of up to MXN4.334 million shall be imposed on the directors, officers or employees of Mexican financial system entities who alter, forge or intentionally do not register operations with the intention of hiding their true nature or affecting the composition of assets, liabilities, contingent accounts or results, as appropriate; the same penalty will apply to those who register false data in the entity’s accounts and to those who include false data on the reports that must be provided to the National Banking and Securities Commission.

The penalties mentioned in the paragraph above will apply to the same officials if they:

  • give a loan or a service knowing of the falsity of the assets-and-liabilities information provided by a client, or that the appraisal value does not accord with reality (with the result that the real value is less than the value of the loan or service provided);
  • provide false or altered information to the National Banking and Securities Commission about their debtor’s solvency or the amount of their loan guarantees; or
  • refuse to provide information or documentation to the National Banking and Securities Commission in order to frustrate an inspection by that authority.

The same officials shall be imprisoned for up to ten years for destroying, or ordering the destruction of accounting systems or records, as well as the evidence which supports them, before the legal expiry of the term for their conservation, and destroying information or presenting false information in order to jeopardise National Banking and Securities Commission supervision of the institution.

Imprisonment for up to 14 years and a fine of up to MXN4.344 million shall be applied to the counsellor, official or employee who directly intervenes in an operation and receives a benefit from the client, either directly or indirectly, for their participation in the processing of the loan or the service provided.

The penalty will depend on the amount of the received benefit and the applicable law.

Imprisonment for up to 15 years shall be imposed on anyone who offers public securities not registered in the National Securities Registry, without the corresponding authorisation, or who offers securities privately in contravention to the Securities Market Law.

Imprisonment for up to 12 years, depending on the amount of the benefit, applies to those who use privileged information which influences the value of a security and obtains a benefit for themselves or a third party; the same penalty shall apply to those who perform acts of market manipulation, obtaining a benefit from it.

Regarding securities, imprisonment for up to ten years shall be imposed on anyone who disseminates false information or conceals or fails to disclose relevant information under the terms of the Securities Market Law.

Imprisonment for up to two years will be imposed on whoever presents themselves to the public as a securities broker without having the corresponding authorisation.

Imprisonment for up to 15 years and a fine equivalent to up to three times the benefit obtained or the loss avoided shall apply to the members of the board of directors, executives, employees or commissioners who disseminate false information or use privileged information relating to an issuing company in order to obtain a benefit or avoid a loss.

Imprisonment for up to six years shall be imposed on those who present themselves to the public as an entity of the financial system without authorisation from the National Banking and Securities Commission.

Imprisonment for up to nine years shall be imposed for tax fraud which is executed by anyone who, through deceit or taking advantage of mistakes, omits the payment of any contribution totally or partially, or obtains any undue benefit to the detriment of the federal treasury.

This offence is also executed by whoever commits any of the following:

  • in his or her tax returns includes false deductions or claims an income less than actually obtained;
  • receives an accruable income higher than stated in their tax return without being able to justify the discrepancy before the tax authority;
  • fails to submit, for more than 12 months, tax returns or documents relating to the fiscal year required by law, while ceasing to pay the corresponding tax.

Although there is no specific obligation to have a compliance programme to prevent tax fraud, it is important to point out that any legal entity must inform the FAGO if, inside such an entity, there is a possible tax fraud. Failure to comply with this obligation may be considered as concealment.

The Commercial Code establishes that a merchant must keep evidence of their operations and accounting bookkeeping during the legal term of ten years. Also, the Federal Tax Code establishes that legal entities’ accounting bookkeeping must be kept during the term of five years. Destroying this information is a criminal offence.

In order to impose imprisonment for up to 15 years and a fine of up to MXN4.344 million on directors, officers or employees of Mexican financial system entities, it must be proven that those officers destroyed or ordered the destruction of accounting systems or records, as well as their supporting evidence, before the expiry of the terms mentioned above. Also, this sanction can be imposed on anyone who destroys information, or presents false or altered information, in a way that jeopardises National Banking and Securities Commission supervision faculties.

Imprisonment for up to ten years and a fine of up to MXN868,800 shall be imposed on economic agents who are competitors and who execute contracts between themselves with the following purposes:

  • to manipulate the fair market price of goods and services;
  • to restrict the production of goods and services and/or their commercialisation;
  • to divide or distribute markets for particular goods and services market between particular customers or suppliers or specific times and spaces;
  • to co-ordinate bids in any public tender procedure; or
  • to exchange information with any of the aforementioned purposes.

For the investigation and prosecution of these criminal offences, it is necessary for a complaint to be filed by the Economic Competition Commission, which will be filed only if its Investigatory Division issues a presumptive-liability opinion.

Criminal liability can be avoided for the involved economic agent who provides to the Federal Economic Competition Commission enough evidence to initiate an administrative investigation and co-operates during the substantiation of that investigation and its consequent trial. This shall proceed only if that economic agent stops participating in absolute monopolistic practices and if the evidence is presented before the investigation is initiated. The trial can be dismissed if the antitrust authority requests it and if the accused has fulfilled the administrative sanctions imposed on it and complied with the technical requirements issued by the Commission.

The Federal Economic Competition Commission is the authority empowered to apply administrative fines of up to MXN15.204 million and/or the equivalent of 10% of the income of the legal entity or person who is found liable for committing, among others, any of the following acts:

  • providing false information to the Commission;
  • participating in a monopolistic practice;
  • ordering measures to regulate essential-inputs access involved in a monopolistic practice;
  • carrying out a monopolistic merger;
  • not giving notice to the Commission of a merger if required to do so by law;
  • failing to comply with the conditions established by a merger resolution issued by the Commission;
  • failing to comply with the conditions established by a fine-dispensation decree issued by the Commission;
  • having control of an essential input through failure to comply with either the law or an order for the elimination of a competence barrier.

In addition to the sanctions mentioned above, the Commission shall decree a disqualification to serve as counsellor, administrator, director, manager, executive, representative or agent for up to five years and a fine of up to MXN17.376 million; the fine will also be applied to any person who takes part in illicit activities established by the Antitrust Federal Law.

Companies may be found liable of crimes against national consumption and wealth when any of the following acts are proven:

  • undue destruction of raw materials, causing damage to national consumption;
  • spreading vegetative or animal diseases to the detriment of the rural economy;
  • the dissemination of fake or exaggerated news causing disruption in the domestic market;
  • intentional export of national merchandise of a quality inferior to that agreed in commercial transactions;
  • trade objects destined for agricultural production given to farmers by a public entity at subsidised prices.

The sanctions for these offences are imprisonment for up to ten years and a fine up to MXN86,880.

Anyone who, having neither consent nor legitimacy and causing a damage or loss, reveals a secret or a confidential communication obtained due his or her employment shall be sanctioned with up to 200 days of pro bono work.

Imprisonment for up to two years and a fine of up to MXN26,064 shall be imposed on anyone who copies, modifies, destroys or provokes the loss of data stored on computing equipment protected by any security mechanism without having authorisation. This sanction will increase to up to eight years of imprisonment and a fine of up to MXN78,192 if the offender has authorisation for accessing the relevant computer equipment and unduly modifies, destroys or provokes the loss of data.

Although there is no specific legislation which regulates cybercrimes, any criminal offence, according to its nature, could be perpetrated through a computer. For example, a common fraud could be executed through a computer; it must be proven that the offender deceived or tricked the victim in order to obtain an undue benefit. Sanctions may vary, depending on the offence and its severity.

Imprisonment for up to nine years will be imposed on anyone who smuggles goods into or out of Mexico without paying the corresponding taxes or without acquiring permission if required and/or who smuggles goods forbidden to import or to export.

It is also considered as smuggling to possess foreign merchandise which is not for personal use without having the documentation which proves the legal presence of such merchandise in the country, or even possessing foreign merchandise forbidden to traffic.

With regard to intellectual property rights, imprisonment for up to ten years and a fine of up to MXN1.737 million will apply to those who, with commercial speculation as their aim, intentionally import to Mexico objects flaunting copyrighted works protected by law.

Imprisonment for up to three years and a fine of up to MXN5,212 shall apply to those who, with the intention to make a profit or gain after a criminal offence is executed, without participating in its execution and being aware of such circumstances, receive or conceal the proceeds of crime. The sanction will be reduced by half if it is proven that the offender did not take the necessary precautions in order to ensure that the person from whom the item was received had the right to dispose of it.

The sanction mentioned above will also apply to those who:

  • help or co-operate with the offender after the execution of the offence;
  • conceal the material object, effects and/or instruments of an offence;
  • fail to give assistance to a criminal investigation or prosecution if requested to do so by the authorities.

According to the FCC, the perpetrators and abettors of a crime are those who:

  • prepare its execution;
  • execute it themselves, joined by or using a third party;
  • abet a third party in its execution; or
  • intentionally aid the offender in their execution of the crime or immediately after it.

Perpetrators and abettors shall be held liable for their offences to the extent of their degree of participation. For abettors held liable, sanctions will be reduced by a quarter of the total penalty for each offence.

Imprisonment for up to 15 years and a fine of up to MXN434,400 shall apply for operations with illegal resources (money laundering), which can be executed by those who:

  • handle, by themselves or using a third party, money or objects which proceed from a criminal offence;
  • hide the nature, origin, location, or ownership of the aforementioned.

It is important to note that, for considering this offence as executed, it is necessary that the offender is aware that the money or objects represent the proceeds of a criminal offence.

Illegal resources shall be considered as such only if proven that those resources represent the proceeds of a crime or if their legal origin cannot be proven.

Money Laundering Prevention Obligations

It is mandatory for financial institutions to implement automatised mechanisms, measures and procedures for preventing and detecting money laundering. These mechanisms must identify customers and report operations when required to do so by law in the same way as any relevant, unusual or vulnerable operation, among others.

Furthermore, financial institutions are obliged by law to appoint a compliance officer and a communication and control committee for preventing money laundering. Their employees must know the content of the internal manual on money laundering prevention and must take an annual training programme on this matter.

Every person or legal entity who carries out vulnerable operations must:

  • know and identify their customers and users by requesting their official ID from them;
  • acquire information about their beneficial owner (if that is the case) and their main business;
  • report their clients’ relevant or unusual operations when required by law;
  • keep and avoid the destruction of information about relevant or vulnerable operations for at least five years.

The National Banking and Securities Commission and the Financial Intelligence Unit are the main authorities empowered to carry out inspections for verifying compliance with these duties. Any failure to comply with the obligations mentioned above is sanctioned with an administrative fine of up to MXN868,800 which can be avoided (just once) if the infringer, before an inspection is initiated, voluntarily complies with the omitted obligation.

The main defence for avoiding any criminal liability is to demonstrate that not all the constituent elements of the offence were proven by the prosecutor and/or the victim and, thus, there is no prosecutable offence.

For example, regarding computer breaches referred to in 3.9 Cybercrimes, Computer Fraud and Protection of Company Secrets, if the accused who provoked data loss in computing equipment proves that the data in matter was not protected by any security mechanism, the courts will dismiss the case because, as described above, not all the constituent elements of the offence were proven.

Another common defence is to point out that the statute of limitations has concluded. If the limitation term has already expired, the criminal action or sanction are no longer applicable for prosecuting or punishing an offender (see 1.2 Statute of Limitations).

As referred to in 2.4 Internal Investigations, establishing a compliance programme and having effective measures for preventing or discovering crimes which could be executed inside the legal entity is a mitigating factor which judges consider for establishing liability. Also, sanctions applicable to legal entities for their criminal offences can be reduced if, before the criminal offence was executed, an effective crime-prevention compliance programme was implemented.

There are no de minimis exceptions, nor any exempted industries or sectors.

The judge must assess any mitigating factors for imposing criminal liability, such as:

  • collaborating with the investigation through the provision of new and significant pieces of information;
  • paying damage restitution before the public hearing trial;
  • establishing efficient measures for preventing and discovering future offences using the means provided by the legal entity.

On 22 April 2020, the FLB issued the Amnesty Law which pardons any person who executed or assisted to execute offences such as non-violent abortions and the possession of drugs in certain circumstances. This branch has power only for granting amnesty to crimes within the federal judge’s scope of jurisdiction.

As mentioned in 2.7 Deferred Prosecution, prosecutors may deny the criminal action by applying an opportunity criterion, which is an immunity programme in exchange for providing new essential and effective information and for appearing in trial.

It is mandatory for every public prosecutor or judge to decree all the necessary measures required for providing personal security to witnesses intervening during the investigation whose lives or integrity are at risk. However, witnesses are not obliged to testify if their statements could lead to self-incrimination.

The Federal Constitution considers as proof only the evidence produced in the trial stage, before a court, or the pre-constituted proofs in accordance with the NCPC.

Regarding pre-constituted evidence, before the initial hearing any evidence can be produced if the following requisites are fulfilled:

  • it must be produced before a judge;
  • it must be requested by the prosecutor, victim or defendant;
  • the reason to request it must be grounded in the necessity to avoid its loss or alteration;
  • it must satisfy all the standards of proof.

According to the Federal Constitution, the burden of proof to demonstrate guilt falls on the accusing party. Nevertheless, every accused and victim has the right to offer any pertinent witness or evidence to sustain their defence or accusation.

Any evidence or witness testimony will lack probative value if it was obtained by transgressing human rights or if it is not incorporated into the trial as established by the NCPC. Courts evaluate evidence in accordance with logic in order to pronounce judgment.

Depending on the offence, there may be presumptive provisions which, unless proven otherwise, establish that an offence is executed if the constituent elements of that presumption are proven.

At the end of the trial stage, if the court considers that every constituent elements of the offence execution were proven, the accused shall be convicted. In this case, the court will set a date for a hearing in order to assess the penalties, establish the individual sanction and quantify damage restitution.

For the assessment of penalties, the court has to consider the following:

Severity of the Offence

This is determined by the value of the victim’s right and the degree of harm done to it; either the intentional or culpable nature of the offender’s act, the means used and the act’s circumstances of time, form, place or occasion, and the offender's degree of participation or assistance.

Offender's Degree of Guilt

This is determined by the act’s discredit judgment, considering its characteristics, circumstances and if the offender had the possibility to behave in a different manner and, thus, to comply with the infringed provision.

To determine the degree of guilt the judge must assess the offender’s:

  • motives for perpetrating the crime;
  • physiological and psychological characteristics at the moment of execution;
  • age;
  • education;
  • customs, social and cultural conditions;
  • kinship or friendship with the victim.

If several offences were executed, the sanction to be imposed will be the one relating to the most severe.

If a plea agreement was made, the judge may reduce the sanctions in accordance with the law, as referred to in 2.8 Plea Agreements, and by assessing all of the above criteria. If a restitution agreement or conditional discontinuance of the criminal procedure was made and duly complied with, the judge shall decree the extinction of the criminal action.

Within three days of the condemnatory sentence being considered as definitive, the court will remit a copy of it to the judge in charge of compliance with the relevant sentence enforcement.

Basham, Ringe y Correa S.C.

Paseo de los Tamarindos 400A 9th Floor
Bosques de Las Lomas, 05120
Mexico City

+52 55 5261 0400

+52 55 5261 0496

basham@basham.com.mx www.basham.com.mx
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Law and Practice in Mexico

Authors



Basham, Ringe y Correa S.C. 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 types of law 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.