Perhaps two of the most significant constitutional reforms in recent times in Mexico were completed in 2011 and 2015. In principle, the 2011 reforms were aimed to promote, respect and protect, and for the State to guarantee recognized human rights. The 2015 constitutional reforms created the Anticorruption National System, which attempts to combat bribery and abuse of power in Mexico. Both of those reforms have led to a series of structural changes with the enactment of new laws and regulations at a federal and state level targeting both the public and private sectors, which have had an impact on internal regulations of companies.
Among other actions, Mexico published legislation in 2012 regulating certain activities to prevent money laundering and the financing of terrorism, also including attempts to deter use of funds that could result from bribery or corruption. Said regulations impose obligations on companies such as limiting the use of money under certain circumstances, reporting certain activities, creating internal “know your customer” policies and implementing risk assessment measures. Likewise, Mexico established a new criminal system and enacted a new National Code for Criminal Procedures published in 2014 and that became enforeced in 2016. This new criminal system, in large part, adopts international standards and recognizes human rights, including presumption of innocence, that enhance the rule of law. The reforms to the criminal system also include creating liability for enterprises or entities, which highlights the importance of having appropriate internal policies and controls and other mitigating factors to reduce exposure.
As part of materializing the 2015 constitutional reforms, among other laws, Mexican Congress passed the National Anticorruption System Law and the General Law for Administrative Responsibilities in 2016. On the one hand, the National Anticorruption System Law created administrative bodies seeking to coordinate and assist special prosecutors in the detection or sanctioning of actions resulting from corruption. On the other hand, the General Law for Administrative Responsibilities identifies that public officials (current and former) and private individuals and entities, may be subject to severe administrative sanctions for bribery, corruption, influence peddling or collusion. In evaluating potential liability, the law identifies that a tribunal should assess whether the company has adopted policies that include organizational manual, code of conduct, adequate and effective control systems for compliance within the organization, surveillance and audit mechanisms, adequate reporting systems, and human resources policies aimed at avoiding the hiring of individuals who may create a risk to the company’s integrity. Liability stemming from corruption actions is autonomous and independent to the participation of a public official; sanctions for the private sector range from fines, payment of damages, shut-down orders and, in extreme cases, an order to dissolve and liquidate the company.
The Judicial System in Mexico has been historically criticized because judgments are generally only made available to the parties within a litigation and not made available to the public. On August 13, 2020, however, an amendment to the General Law of Transparency and Access to Public Information in Mexico was published to require both federal and state courts to make available redacted versions of judgments (not litigation papers). Proponents commend the reform because it will not only enhance transparency in legal proceedings, but will also, hopefully, attempt preventing corruption because decisions could be subject to public scrutiny.
In addition to the internal laws and several international treaties and conventions of which Mexico is a signatory, the United States-Mexico-Canada Agreement (known in the U.S. as USMCA and in Mexico as T-MEC) is likely one of the few international trade and investment treaties that incorporates a provision for discouraging corruption. The USMCA came into effect in Mexico on July 1, 2020 and, similar to its predecessor, the North American Free Trade Agreement (commonly known as NAFTA), in its time, the USMCA was a highly negotiated treaty that resulted in recognizing principles dealing with issues impacting international trade and investment. Amongst those principles are also compliance issues with the inclusion of Chapter 27 dealing with preventing and combating bribery and corruption in international trade and investment.
The cornerstones for preventing corruption is recognized in USMCA through principles of integrity, honesty and responsibility. The language included in the anticorruption chapter of the USMCA could add towards applying existing local legislation and possibly support additional reforms to add “teeth” or increase applicability and force of legislation by adopting principles stated in the USMCA as well as those stated in other international treaties and conventions signed by Mexico. In summary, the USMCA includes an obligation for the member States to adopt or maintain legislative and other measures to establish criminal offenses for both individuals and entities. Also, it requires each State to adopt or maintain recordkeeping measures, disclose certain financial information and abide by certain accounting and auditing standards. Furthermore, the USMCA chapter on anticorruption includes an obligation for the central governments of Mexico and the United States to adopt or maintain protections for whistleblowers. Regarding the so-called “facilitation payments,” the States agreed to encourage enterprises to prohibit or discourage them as well as to promote awareness within the government to deter the solicitation and acceptance of facilitation payments. The parties to the USMCA endeavor deterring corruption and expressly recognize encouraging enterprises for including transparency, risk self-assessment and implementation of anti-bribery compliance programs.
The foregoing are issues to consider when evaluating the implementation of internal compliance programs and conducting risk mitigation efforts within an enterprise. Businesses should consider evaluating each of their activities to identify potential exposure, regulatory compliance issues that should allow them to assess business risks and identify areas of opportunity for mitigating those risks through the implementation of internal controls or compliance programs in several distinct phases, departments and levels within a particular organization. States have guidelines and parameters to adopt or maintain measures or legislation obligating or encouraging enterprises conducting business in the region to adopt integrity, ethics and compliance programs to combat corruption. Structural changes that have been implemented throughout the past decade in Mexico have sought to strengthen transparency and attempt to deter corruption; the USMCA contributes to those efforts and provides parameters for signatories to further cooperate and coordinate to enhance the rule of law, combat corruption and strengthen democracy throughout the region.