Risks and opportunities brought by the new Economic Crimes Act

On Thursday, 17 August, Act No. 21.595 on Economic Offences ("the Act") was published in the Official Journal. We will then review some of the main risks to be addressed by the management and legal areas of companies, as well as the opportunities that this new regulation can bring.

Categories of Economic Crimes

The Act divides economic offences into four categories:

1. First category. These are crimes that are considered economic under all circumstances and are those that are against the financial market and competition, such as the provision of false information to the CMF, the use of insider information or the commission of collusion.
2. Second category. They are economic offences provided that they are committed in the exercise of a position, function or position in an undertaking, or for the economic or other benefit of an undertaking. This category includes environmental, tax, unfair administration and intellectual property offences.
3. Third category. They are economic offences to the extent that they are committed by a public official, provided that a person in the exercise of a position, function or position in or for the benefit of an undertaking has been involved in it. These are crimes such as embezzlement of public flows, forgery of public instruments, fraud of the public prosecutor, among others.
4. Fourth category. These are the offences of receiving, laundering of assets and laundering of assets when they are based on an economic offence.

Exclusion of micro and small enterprises

The Act shall not apply to offences committed in the context or for the benefit of a micro or small enterprise (annual income of 2,400 UF or less and annual income of 2,400 UF and of 25,000 UF or less, as the case may be).

Liability of natural persons

The Act amends the criminal liability of natural persons who, in the context of a business activity, participate in the commission of an economic crime. In this regard, a specific sanctions and penalties regime is applied in respect of them, which has the following characteristics:

1. Determination of penalties: A special regime of attenuating and aggravating is established, including also highly qualified attenuating and aggravating. It is, for example, a highly qualified mitigating factor to take timely and voluntary measures to prevent or substantially mitigate the generation of damage; on the other hand, active participation in a higher hierarchical position in the company where the crime occurred is a highly qualified aggravating factor.
2. Alternative penalties for economic offences: The regime for the replacement of penalties for such offences is amended, and custodial or restrictive sentences may be replaced by conditional remission, partial detention at home or partial detention in special establishment.
3. Fines: A system of days - fine is established, which will be determined from the degree of the penalty established for the respective offence. On the other hand, the value of the day - fine shall be determined, as a general rule, in accordance with the income of the convicted person.
4. Disablements: In conjunction with the imposition of penalties, the court may impose disablements to hold public, management or to hire with the State.
5. Profit fee: Any conviction for economic crime will also involve the seizure of profits.

Amendments to Act No. 20.393

The new Economic Offences Act also amended Act No. 20,393 on the criminal liability of legal persons. In this regard, the catalogue of offences for which legal persons are responsible is extended, including all categories of economic offences. It also indicates that legal persons under private law; public enterprises established by law; State companies, societies and universities; political parties and religious legal persons under public law shall be criminally responsible.

In order to incur criminal responsibility, the offences must be committed by the legal person within the framework of his or her activity or by any natural person who has a position, function or position in it and provided that this is favored or facilitated by the lack of effective implementation of an appropriate model for the prevention of such crimes.

Crime Prevention Model (MPD)

Act No. 20.393 states that the effective implementation of an MPD is exempt from criminal responsibility of the legal person. Therefore, it will not be enough to have only an MPD as a compliance measure, but on the one hand, the crime risks to which the company is concerned must be properly identified and, on the other hand, effectively implement a MPD with appropriate protocols or procedures to prevent and detect criminal conduct, providing safe channels of complaint and internal sanctions in case of non-compliance, as well as the appointment of those responsible for implementing such protocols and subject the MPD to regular evaluation by independent third parties.

These protocols, procedures and sanctions are also required to be communicated to workers, and the domestic legislation expressly incorporated in the employment and service contracts of the legal person must be in place.

Entry into force of the Economic Offences Act

While the provisions of the Act have entered into force since the day of its publication in the Official Journal, the amendments made to Act No. 20.393 will come into force one year after its publication.

Opportunities of the new Economic Crimes Act for companies

While the Act has expanded the risks to which companies and their senior officials are affected, it also brings new opportunities for stronger corporate governments in respect of compliance areas and also in administrative and management bodies. In this regard, a good MDP will only meet its objective in so far as the different actors in the companies take their effective implementation seriously, actively participating in risk detection within their organizations, conducting regular training, establishing safe reporting channels and conducting independent assessments to improve their practices and identify potential new risks. In this, the role of directors, managers and managers will be essential, as well as maintaining serious and coherent corporate practices that make tangible the effects of DMPs and other compliance measures taken within the company.

Written by:
Mauricio Rojas.