White-Collar Crime 2019

Last Updated October 21, 2019

Mexico

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.

In Mexico, legal entities can be prosecuted for criminal offences at both the federal and state level. In this regard, it is important to note that, in addition to the Federal Criminal Code (FCC), each of the 32 Mexican states (including Mexico City), has its own Criminal Code. At the same time, there is only one criminal procedural code, the National Criminal Proceedings Code (NCPC), which applies to all criminal procedure, whether federal or local. This chapter will be mainly focused on the provisions of the FCC and occasionally the provisions of Mexico City’s Criminal Code.

Crimes in Mexico can be classified, among other ways, by whether they require pretrial detention or not, whether they are of federal or state jurisdiction, whether they were executed intentionally (dolus) or culpably, according to their form of perpetration, and by whether they are prosecuted ex officio or through the petition of the aggrieved party.

Crimes which require pretrial detention (officious detention) are established in the Mexican Constitution. The pretrial judge must order this precautionary measure in cases of crimes of sexual abuse or violence against minors; organised crime; murder; femicide; rape; kidnapping; human trafficking; burglary (also robbery); the use of a social programme for electoral purposes; corruption; theft of cargo in any way; 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..

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 all those provided in federal laws and international treaties, those that have been executed abroad but produce effects in Mexico, those committed against the Federation, those executed or suffered by a public servant or federal employee in relation to their functions, those executed against any federal public utility or those that preclude or hinder the exercise of any of the Federation’s duties. All other crimes are considered as falling under the states’ jurisdiction.

An offence is committed with dolus when the offender knows the constituent elements of his or her 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 would 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 commits it has not foreseen that it will occur (despite it being foreseeable), or anticipates the possible commission of the offence (trusting that it will not occur), or when the offender has not complied with their duty of care, according to the circumstances and personal conditions.

Regarding the ways an offence can be executed, they are considered: as instantaneous, when at the moment of its performance all of its constituent elements were carried out; as permanent, when their execution is prolonged over time; and as continued, when the same offender (having the same purpose) carries out several offences against the same victim.

Criminal law in Mexico, in relation to statutes of limitations, establishes that the simple course of time is enough to extinguish criminal actions and their sanctions. The deadline for the limitation period is doubled if the offender is abroad and, because of this circumstance, the conduct of an investigation is not possible.

FAGO’s criminal action limitation period begins to run:

  • in the case of instantaneous offences, after the moment at which said offence was perpetrated;
  • concerning an attempted crime, after the last act of execution was performed;
  • relating to continued offences, after the moment at which the last act was performed; and
  • in cases of permanent crime, after the cessation of execution.

If a prior judicial resolution is required to file a criminal action, the limitation period begins to run as soon as that resolution is issued.

After the trial is concluded, the limitation period that applies to the sanction imposed on the offender begins to run on the day on which he or she subtracts from the action of justice in the case of an imprisonment sanction, and, when imprisonment is not decreed, after the judgment is issued by the court.

The limitation period applying to imprisonable offences is equal to the prison term imposed plus a quarter of that time, never being less than three years, which can be interrupted by the apprehension of the offender, even if it is for a different crime.

If the penalty is only a fine, the criminal action limitation period lasts one year. If the corresponding sanction is imprisonment, the criminal action limitation period is equivalent to the mean average imprisonment term pursuant to provisions contained in the law for the offence in question, and it will never be less than three years. If multiple crimes occur, the limitation period for bringing a criminal action is the one appropriate for the offence meriting the longest penalty.

Regarding crimes which necessarily require a criminal complaint filed by the victim, the limitation period for a criminal action is one year, starting on the day on which those who have the right to file a complaint are aware of the offence and the offender’s identity. Notwithstanding this circumstance, the limitation period is three years. Once the complaint has been duly filed within the aforementioned time, the limitation period that must be applied is that concerning the offence prosecutable ex officio.

The limitation period will be interrupted by the acts of investigation practiced by the FAGO.

Finally, the interruption, while the investigation conducted by the Public Prosecutor takes place, cannot extend the limitation period by more than half.

There is no specific law in Mexico which has extraterritorial reach at all times. However, various of the FCC’s articles establish in what circumstances a crime perpetrated abroad will have effects in Mexico and, therefore, may be investigated, prosecuted and sanctioned within the country.

In this regard, the FCC will be applied to crimes which are initiated, prepared or executed abroad when they produce or intend to produce effects within Mexico. Also the Code is applicable to a crime perpetrated abroad:

  • when either the offender or their victim is a Mexican and the accused is in Mexico;
  • when the crime has not been definitively tried in the country in which it was executed and if the act is considered as an offence both in that country and in Mexico; and
  • where there is a relevant extradition treaty in which the obligation to judge or to extradite is provided for, when the offender has not been extradited.

In the same way, offences executed in embassies and legations; in Mexican vessels which are on the high seas; in Mexican warships or merchant ships which are in a foreign port or foreign territorial waters; and in a Mexican or foreign aircraft which is in either Mexican or foreign territory, atmosphere or territorial waters, will be considered as executed in Mexico.

When a member, administrator or representative of any legal entity, except public institutions, perpetrates an offence with means provided by that legal entity and for that purpose, or in the name or on behalf of that legal entity; and the lack of due control of the organisation of that legal entity is proven, the judge will impose on the entity:

  • a suspension of activities for a period ranging from six months to six years;
  • a suspension of activities of its establishments;
  • a disqualification from participation in public bids or contracts; or
  • a judicial intervention to safeguard its workers’ rights.

In federal matters, these penalties will be imposed on a legal entity only if its participation in the execution of any of the offences provided in Article 11 Bis of the FCC is proven. These offences 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, and business in (or illegal possession of) hydrocarbons.

The liability which could be imposed on the administrator or representative (either de facto or de jure) is autonomous from the liability attributed to a legal entity. There is no provision for a preference or priority to investigate and punish either the person or the legal entity. To impose criminal liability on directors, administrators or even the legal entity itself, their participation in the execution of the offence must be proven.

The NCPC establishes that the criminal liability of a legal entity is not extinguished in the case of mergers, conversions or spin-offs. In these cases, the penalty may be graduated 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.

It is important to point out that the Mexico City’s Criminal Code provides that the judge or the court may annul the merger of a criminally liable legal entity, so offences do not go unpunished.

Currently, several state criminal codes have also established which crimes can be committed by a legal entity.

It is the obligation of the public prosecutor to request damage restitution in favour of the victim. Notwithstanding this, the latter may request payment directly from the offender. In order to guarantee the damage restitution, the victim or the prosecutor can request that the criminal judge seize assets and/or bank accounts and/or securities which are within the financial system. Likewise, when the prosecutor requests that the criminal judge find that the offender is subject to trial, the victim has the right to appear in order to make a request for, among other things, damage restitution. After a trial ends, the court will indicate the date on which a hearing for economic compensation for the damage caused will be held.

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 above, in 1 Legal Framework, were issued by the 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 this, the Mexican Constitution establishes that private communications are inviolable and that secondary law will criminally sanction any action intended to threaten the privacy and freedom of that communication, unless access is voluntarily provided by any of the individuals involved in the communication. Based on this, recent decisions of the Supreme Court have established:

  • that this inviolable privacy only applies in regard to third parties not involved in the communication, if one of the participants involved in the communication allows access to it, the rights of the participants will not be violated;
  • that ownership of the relevant computer is irrelevant when considering the interception of an email;
  • that the interception can be done through any of the means in which a communication is done; 
  • that the interception occurs when, without the consent of the computer’s user or owner, the password to access it is violated;
  • that if an individual knows the password of the computer’s user or owner, but does not have his or her consent to access his or her email, that conduct is considered a breach of privacy and, consequently, a violation; and
  • that the limitations on interception of communications are not only applicable to the moment in which those communications are carried out, but also when they are reviewed in the material supports that store them.       

Concerning potential new legislation, the Chamber of Senators has approved a law focused on tax fraud, associated with the issuance of forfeited billings or invoices, which would make the practice a form of organised crime (and, therefore, an offence that would require pretrial detention (officious)). This proposal has not yet been approved by the House of Deputies.

In Federal matters, the FAGO is the sole authority empowered under the Constitution to investigate white-collar offences. In local matters, the authorities that investigate these offences are the offices of the Attorney General in each of the states which have jurisdiction in the place where the offence was performed.

There are specialised units at the state and federal level that are responsible for the investigation of certain white-collar crimes, as well as criminal judges and courts.

The NCPC establishes that any investigation begins with the filing of a denunciation, complaint or other similar motion. The denunciation can be filed in any manner and must contain, unless it is anonymous, general data, an account of the relevant facts and the identities 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 offences which are prosecutable ex officio, any communication made by any person to the prosecutor is enough for the opening of an investigation. If the prosecutor is aware of the probable commission of an offence, whose investigation can be initiated by the filing a complaint or any similar requirement, it is mandatory to inform the victim of this situation.

The prosecutor has broad powers to obtain information or evidence in order to support the investigation. There are certain acts which necessarily require judicial authorisation or approval, broadly those that affect human rights, such as search warrants or wiretapping. Prosecutors may carry out other investigative acts – for example, the interview of witnesses, including an officer or director of a company under investigation – without the authorisation of the judge.

Every person or legal entity has the obligation to provide all the information, including documents, requested by the public prosecutor and the police in the course of an investigation. The prosecutor may summon, and force, anyone to appear in order to be interviewed. In either case, if the prosecutor’s order is not complied with, a fine or an arrest for up to 36 hours may be imposed.

As previously mentioned, if the public prosecutor deems it necessary to search a private property, a judge must be asked for authorisation to carry out the act. The search warrant request must specify, among other things, the reasons supporting the need for the search, as well as the place to be searched and the person or objects sought. The judge must resolve the search warrant request within six hours of receiving it.

Although every person has the duty to inform the authorities that an act probably considered an offence has been committed, there is no legal obligation to conduct internal investigations in criminal matters. However, it is a mitigating factor if a legal entity collaborates during the investigation by providing new and decisive evidence or if that entity establishes, before the oral trial stage, effective measures for preventing or discovering offences which could, in the future, be executed inside it.

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).

Mexico is party to legal assistance and cross-border co-operation treaties with 31 countries which provide for – among other things – submitting evidence, carrying out notifications, expert opinions, damage restitution proceedings, search warrants and preventive measures for property restricting purposes.

It is important to point out that requests for assistance in carrying out search warrants, home searches, property seizures, wiretapping or any other coercive or human-rights affecting measure, will only be addressed if the fact under investigation is also considered an offence under the law of the country from which assistance is being sought. This is different in the case of the USA, since even if the fact under investigation is considered an offence, the practice of a seizure, for example, may only be addressed if the relevant US judicial authority orders it.

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

  • such assistance is contrary to the legislation of the country of whom the request is made;
  • the act under investigation is a political or military offence;
  • it involves persecution related to the race, religion, sex, nationality, political opinions or personal or social conditions of the accused party;
  • it is contrary to the non bis in idem principle and,
  • the requested country considers that providing such assistance may damage its sovereignty.

However, if a person located abroad, who is summoned to testify in Mexico, invokes immunity or any type of impediment in accordance with Mexican law, this must be informed by the requested country and resolved by Mexico. Also, if assistance is requested in notifying that a person or expert located abroad must appear in Mexico to testify, no penalty may be imposed on the person in the foreign country because of a failure to appear in Mexico.

The NCPC establishes the obligation for Mexico to provide international legal assistance to prosecutors or judges from abroad who require it because of the investigation, prosecution and sanction of offences in their jurisdiction.

If there is no international treaty between Mexico and a foreign country, and the latter requires assistance, Mexico will provide it on the condition of reciprocity, meaning that the foreign country expresses its willingness to co-operate with Mexico on similar matters.

Mexico is party to international treaties regarding extradition with 35 countries, which provide that extradition will be granted for offences either under investigation or trial, considered by both parties as an offence and attracting a minimum imprisonment penalty of between one and three years, depending on the treaty.

However, there are some international treaties, as in the case of Mexico and the UK, or the one made between Mexico and Belgium, in which the offences for which extradition may be granted are in a catalogue. 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 personal property; falsification of public or private documents and their circulation; and fraudulent conveyance offences. On the other hand, the catalogue of the treaty held with Belgium includes, among other offences: forgery of documents; false statement by a witness, expert or interpreter; insolvency criminal offences; breach of trust and fraud; and 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;
  • a person is criminally prosecuted for reasons of race, gender, religion, nationality, political opinions; or
  • the offence limitation term has expired.

The Mexican International Extradition Law, which provides for extradition requests submitted by a country which is not party to a treaty on such matters, establishes in which situations the Mexican government may extradite an accused person for trial before the courts of the requesting country.

According to the above-mentioned Law, the Mexican state may extradite all people who have committed offences intentionally for which the imprisonment penalty is at least equal to the mean average of one year. Also, the same law states 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, in accordance with Mexican criminal law;
  • when the limitation term for either the criminal action itself or the penalty has expired; or
  • when there is a well-founded risk that the person claimed for extradition will be subjected to torture or forced disappearance.

After the public prosecutor carries out a criminal investigation before a judge, the criminal procedure begins with the initial hearing in which the public prosecutor, informs the accused person that he or she is under investigation for one or more acts which the law considers as an offence. In this hearing, the public prosecutor must state, among other things, the charges filed against the accused, their legal characterisation and the degree of participation of the accused.

Subsequently, the public prosecutor requests that the accused be subject to a trial. In order to do so, the prosecutor must prove both that an act considered an offence was executed and the probability that the accused party either executed it or participated in its execution. Once both parties are heard, and the evidence has been offered by the defendant, the judge may resolve if the accused party is subject to trial. The order to indict the defendant to the process has the effect of establishing the particular criminal act, the truth of which the trial will later determine.

As mentioned above, a company can be criminally liable for crimes committed in its name, on its own behalf, for its benefit or through the means that the company has provided 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 autonomous from the personal liability of their representatives or administrators.

The restitution agreement is an alternative solution mechanism made between the victim and the offender, which must be approved by either the prosecutor or the judge, depending on the procedural stage. Once the agreement is fulfilled, it produces the legal effect of extinguishing the criminal action. The agreement may only be made in regard to offences which are prosecuted by the filing of a complaint by the aggrieved party (or an equivalent requirement) and which allow the victim to pardon the offender. This agreement may be made for culpable offences or for property-related offences committed without violence.

These restitution agreements can be made during the term between the complaint filing and the moment before the judge’s order to the oral trial stage is decreed. If an indictment has been already issued, the parties may request that the judge suspend the criminal procedure by up to 30 days so that the restitution agreement can be negotiated. A restitution agreement may only be approved under the conditions that the obligations provided therein are not disproportionate; that those who make the agreement are in positions of equal power for negotiating; and where the agreement is made without any intimidation, threat or coercion.

Another alternative mechanism is the conditional discontinuance of the criminal procedure which may be requested by either the public prosecutor or the accused party. The request needs to contain a damage restitution plan and the accused party expresses submission to one or more conditions established by the NCPC. This mechanism tends to guarantee protection of the victim’s rights in order to extinguish the criminal action. This alternative solution mechanism proceeds only if the offender is subject to trial, the resolution has been issued for an offence which is punishable with an average of five years' imprisonment or less and if the victims have not argued a well-founded opposition to the mechanism.

The opportunity to file a proposal for the conditional discontinuance of a criminal procedure falls between the subject-to-trial resolution being issued and the moment the rule to open the trial stage is issued.

This mechanism establishes a term, between six months and three years, for the offender in which he or she has to comply with the obligations provided in the NCPC, such as residing in a specific place; not frequenting certain places and/or people; doing pro bono work; submitting to surveillance determined by the judge; and any other measures deemed necessary to achieve effective protection of the victim's rights.

With regard to plea agreements, once the judge has decided that the offender is subject to trial, the accused party, in the case that he or she admits his or her criminal liability for the offence he or she is accused of and accepts a conviction based on the evidence presented by the public prosecutor, may have their sentence or penalty reduced by the judge.

This reduction, in the case of crimes establishing an imprisonment penalty whose mean average does not exceed five years, shall be up to one half or two thirds of the minimum penalty in the case of intentional and culpable crimes, respectively. In cases where the imprisonment penalty mean average exceeds five years, the penalty reduction shall be up to one third or one half of the minimum penalty for intentional and culpable offences, respectively.

The victim has the right to oppose the plea agreement as long as it is proven in a well-founded manner that the damage restitution has not been guaranteed.

The main crimes for which legal entities, can be criminally liable, regarding corporate fraud, are:

  • Fraud administration – which is executed by a person in charge of the administration or care of other people's property who, having the purpose of obtaining an economic benefit, intentionally damages the owner’s property by carrying out operations that are harmful to those owners. The penalty for this offence is imprisonment for up to 12 years and a fine of up to MXN10,139.
  • 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 come from, or represent the product of, a criminal offence. The penalty is imprisonment for up to 15 years and a fine up to MXN22,450.
  • 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, or the risk of it, to the environment 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 noise, vibration, thermal or light energy coming from emitting sources and the discharge of polluting waste into the soil, subsoil or bodies of water under 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, it is a crime to intentionally distribute and commercialise unauthorised copies of any type of work protected by the law, with the purpose of commercial speculation. The penalty for the offence is imprisonment for up to ten years and a fine of up to MXN1.6898 million.

Regarding industrial property crimes, it is an offence to produce, commercialise, import or provide raw material for products, knowing that these objects flaunt counterfeited trademarks. 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 up to MXN844,900.

A sanction of up to six years of imprisonment and a fine up to MXN8,449 is applied for influence peddling, which is committed by any person or company which causes any public servant to illegally process public businesses 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 of up to 14 years and a fine up to MXN12,673 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 and a fine up to MXN4.2245 million 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. The penalty will depend on the amount of benefit received and the applicable law.

In Mexico, a compliance programme is not required by the law in order to prevent bribery and influence peddling offences. Nevertheless, in cases where liability is established against a corporation, the lack of a compliance programme is evidence of its responsibility. In this regard, the NCPC establishes that corporations will be criminally 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. This Code also establishes that judges, in order to determine the degree of participation and, therefore, the liability of legal entities, must assess, among other things, the impact of the failure to implement organisational control mechanisms and/or the noncompliance with legal provisions.

The FCC provides that sanctions applicable to legal entities for their criminal offences can be reduced if, before the perpetration of those criminal offences, an effective crime-prevention compliance programme was implemented.

Besides, the General Law of Administrative Responsibilities, provides that in the determination of a fine or any other administrative sanction for 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, 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, for which legal entities can be found liable, are listed below.

Imprisonment for up to 15 years and a fine of up to MXN8,449,000 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 MXN29.5715 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 MXN29.5715 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 to the one agreed upon, if those resources came from a public policy programme for economic development or from international organisations.

The same penalty mentioned 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.

These penalties also apply to anyone presenting 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 up to MXN25.347 million will 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 the circumstance mentioned above.

Imprisonment for up to nine years and a fine of up to MXN25.347 million will be sanctioned for illegal access to the electronic systems of the Mexican banking system to obtain financial resources or confidential information, or to intentionally alter the operation mechanisms of ATMs.

Imprisonment for up to 15 years and a fine of up to MXN4.2245 million could be applied for arranging or ordering the undue disposition of financial entities' clients’ resources. The imprisonment will 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 to the one agreed upon.

Imprisonment for up to ten years will 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 prevent access to it.

Imprisonment for up to 15 years will 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 MXN25,347 will 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 MXN4.2245 million will 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 same penalties 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 will 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 expiration 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 up to MXN4.2245 million will 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 will be imposed on anyone who offers public securities that are 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 10 years will 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 will 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; also, it is committed by whoever in his or her statements includes false deductions or claims an income less than actually obtained. This sanction will also apply to those who receive an accruable income higher than stated in their tax return without being able to justify the discrepancy before the tax authority and to the failure to submit, for more than twelve months, tax returns or those 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 any 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.

In order to impose imprisonment for up to 15 years and a fine of up to MXN4.2245 million on directors, officers or employees of Mexican financial system entities it must be proven that such officers destroyed, or ordered the destruction of, accounting systems or records, as well as their supporting evidence, before the expiration 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.

Imprisonment for up to ten years and a fine of up to MXN848,500 is 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, in any form, the production of, or trade in, goods and services;
  • 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 purposes mentioned above.

For the investigation and prosecution of these criminal offences the Federal Economic Competition Commission will file the corresponding complaint, though only if the Investigatory Division inside that institution issues a presumptive-liability opinion.

The criminal liability can be avoided if an economic agent involved in the offence provides the Federal Economic Competition Commission with enough evidence to initiate an administrative investigation and co-operates during the substantiation of that investigation and its consequent trial, if that economic agent stops its participation in absolute monopolistic practices and also 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 MXN14.78575 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 will decree the disqualification to serve as counsellor, administrator, director, manager, executive, representative or agent for up to five years and a fine of up to MXN16.898 million; the fine will also be applied to any person who takes part in illicit activities established by the Antitrust Federal Law.

Legal entities will be found liable for 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 a disorder in the domestic market; intentional export of national merchandise of a quality inferior to that agreed in commercial transactions; and trade in 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 MXN84,490.

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

Imprisonment for up to two years and a fine up to MXN25,347 will be imposed on anyone who, without having authorisation, copies, modifies, destroys or provokes the loss of data stored on computing equipment protected by any security mechanism. This sanction will increase to up to eight years of imprisonment and a fine of up to MXN76,041 if the offender has authorisation for accessing the relevant computer equipment and unduly modifies, destroys or provokes the loss of data.

It is important to point out that although there is no specific legislation which regulates cybercrime, any criminal offence, according to its nature, could be perpetrated through a computer. For example, a common fraud could be executed through a computer as long as it is proven that the victim was deceived or tricked 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 mandatory taxes or without acquiring permission if it's required, who smuggles goods which it is forbidden to import or to export, who has foreign merchandise in his or her possession (which is not for personal use) without having the documentation proving the legal stay of that merchandise in the country, who possesses foreign merchandise in which it is forbidden to traffic, and who presents false documentation to the customs authorities.

With regard to intellectual property rights, imprisonment for up to ten years and a fine up to MXN1.6898 million will apply to those who, with commercial speculation as their aim, intentionally import to Mexico objects flaunting trademark counterfeiting and/or copyrighted works protected by industrial property law and copyright law.

Imprisonment for up to three years and a fine of up to MXN5,069 will 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 knowing of the circumstances, receive or conceal the proceeds of crime. The sanction will be reduced by half if 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; or 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 by themselves, joined 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 are held liable for an offence to the extent of their degree of participation in it. 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 MXN422,450 will apply for operations with illegal resources (money laundering), which are committed by those who handle, by themselves or using a third party, money or objects which proceed from a criminal offence; or those who hide the nature, origin, location, or ownership of those resources when the offenders are aware that they originate in, or represent the proceeds of, a criminal offence. Resources will be considered illegal when there is enough evidence that those resources represent the proceeds of a crime and their legal origin cannot be proven.

According to the Federal Law to Prevent and Detect Operations with Illegal Resources, it is mandatory for financial institutions to implement measures and procedures for preventing and detecting money laundering, for identifying customers, and for reporting operations when required to do so by law. These institutions have the obligation to appoint a compliance officer and a communication and control committee; to implement a manual on money laundering prevention and an annual training programme on this matter; to provide an annual audit report to the National Banking and Securities Commission; and to have automatic systems for detecting any relevant, unusual or vulnerable operation.

Any person or legal entity which 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; and report their clients’ relevant or unusual operations when this is required by Law. They must also keep, and avoid the destruction of, evidence of 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 MXN844,900 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 the demonstration that there is no prosecutable offence because not all the constituent elements of the offence are proven. For example, regarding the computer breaches mentioned above, in 3.9 Cybercrimes, Computer Fraud and Protection of Company Secrets, if the offender who provoked data loss in computing equipment proves that the data in question was not protected by any security mechanism, then the courts will dismiss the case because not all the constituent elements where executed by the accused.

Another common defence relates to the statute of limitations. 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 mentioned above, 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.

Mitigating circumstances to be considered when assessing criminal liability are:

  • collaboration with the investigation of the offence through the provision of new and significant pieces of evidence which resolve or reveal both the facts and the criminal liabilities;
  • compensation for the damage caused before the public hearing trial; and
  • execution, before the public hearing trial, of efficient measures to prevent and discover the crimes that might be committed in the future with the resources of the legal entity.

With regard to an offender whistle-blower, the NCPC establishes that the public prosecutor may deny a criminal action by applying an opportunity criterion, which is an immunity programme for co-operation that leads to the prosecution of a more severe offence through the provision of essential and effective evidence and commitments to appear in trial.

It is mandatory for every public prosecutor or judge to decree all the necessary measures required to provide security to, among others, witnesses intervening during the investigation whose life or integrity are at risk. On the other hand, witnesses are not obliged to testify if their statements could lead to self-incrimination.

The Federal Constitution considers as proof, for sentencing purposes, only the evidence produced 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; requested by the prosecutor, victim or defendant; the reason to request it must be grounded in the necessity to avoid its loss or alteration; and 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 according to the offence in question. 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 is obtained by transgressing human rights law 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.

After the trial has ended and if the accused is found guilty, the court will set a date for a hearing in order to establish the individual sanction and the damage restitution. For the assessment of penalties, the judge has to consider the following:

  • The offence’s severity – which 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.
  • The offender's degree of guilt – which is determined by the act’s discredit judgment; assessing its characteristics and circumstances; and if there was a possibility for the offender 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 the crime; his or her physiological and psychological characteristics at the moment of execution; his or her age, education, customs, social and cultural conditions, and either kinship or friendship with the victim.

In the case of a multiplicity of criminal offences, the sanction to be imposed will be the one relating to the most serious offence.

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 execution.

If a plea agreement was made, the judge may reduce the sanctions in accordance with the law, as mentioned above in 2.8 Plea Agreements, and 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.

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

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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.

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