Corporate crime, fraud and investigations in Argentina: overview

A Q&A guide to corporate crime, fraud and investigations in Argentina.

The Q&A gives a high level overview of matters relating to corporate fraud, bribery and corruption, insider dealing and market abuse, money laundering and terrorist financing, financial record keeping, due diligence, corporate liability, immunity and leniency, and whistleblowing.

This Q&A is part of the global guide to corporate crime, fraud and investigations law. For a full list of jurisdictional Q&As visit www.practicallaw.com/corporatecrime-mjg.

Manuel Beccar Varela, Estudio Beccar Varela
Contents

Fraud

Regulatory provisions and authorities

1. What are the main regulatory provisions and authorities responsible for investigating corporate or business fraud?

Criminal law

The main provision under criminal law that governs and punishes the perpetrators of crimes related to fraud is the Criminal Code of Argentina, which applies to the whole country. The Code, in its more than 300 Articles, provides various criminal acts that establish considerable penalties for those who violate certain prohibitions related to the company. Additional laws have been enacted, especially during the course of the past two decades, because of the emergence of so-called "white collar" crimes and commitments assumed by Argentina in several international treaties (see Question 29).

Also within the criminal framework, there are various government agencies that have supervisory responsibilities and seek to prevent the commission of corporate crime, such as the:

  • Federal Administration of Public Revenue (Administración Federal de Ingresos Públicos) (AFIP).

  • Financial Information Unit (Unidad de Información Financiera) (FIU).

  • Central Bank of the Republic of Argentina (Banco Central de la República Argentina) (BCRA).

  • General Inspectorate of Justice (Inspección General de Justicia) (PRC).

  • National Securities & Exchange Commission (Comisión Nacional de Valores) (CNV).

  • Various offices and agencies of the National Judicial Power and the Public Prosecutor. Within the office of the Public Prosecutor, there is a specific area of Prosecutors specialising in this type of crime, called the Office of the Prosecutor for Economic Crime and Money Laundering (Procuraduría de Criminalidad Económica y Lavado de Activos) (PROCELAC).

See box, The regulatory authorities.

Civil liability

Corporate or business fraud can also give rise to civil liability. Civil liability (unlike criminal liability) requires damage to a certain person to occur, and only that person (or an agent or successor) can bring a claim. Mere attempts are not punishable.

Liability in this area can arise under tort, through the fundamental principle of alterum non laedere, which precludes individuals from harming others. This principle is set out in section 19 of the Argentine Constitution and has been expressly regulated in sections 1109 and 1113 of the Argentine Civil Code (among others).

For corporate or business fraud to give rise to civil liability, the following elements must be present:

  • A breach of either a legal or contractual obligation, constituting an illicit act.

  • The existence of actual damage.

  • A sufficient causal relationship between the illicit act and the damage.

  • Negligence or wilful misconduct from the damaging party.

There are also some specific legal rules concerning fraud:

  • Fraudulent misrepresentation (section 931, Argentine Civil Code). The following are deemed to be fraudulent misrepresentation, and might give rise to civil liability if the other elements are met:

    • any untrue assertion or concealment of the truth; or

    • any artifice, cunning act or contrivance directed to those ends.

  • Duty of directors or managers to act with loyalty and with the diligence of a good businessman (section 59, Business Associations Law). Failure to comply with this duty can give rise to unlimited joint and several liability for the damages caused to the company, the shareholders and other third parties (among others, any creditors), by their actions or omissions.

  • Rights of unsecured creditors to revoke acts carried out by the debtor to the detriment of or in fraud of their rights, in the event any acts of corporate or business fraud resulted in an insolvency proceeding (section 961, Argentine Civil Code). For this remedy to proceed, it is necessary:

    • for the debtor to be in a situation of insolvency (interruption of payments);

    • that the damage caused to the creditor results from the act of the debtor, or that he was in an situation of insolvency prior to that;

    • that the credit by virtue of which the remedy could proceed, is prior to the debtor's act.

Offences

2. What are the specific offences relevant to corporate or business fraud?

The following are the relevant financial crimes:

  • Frauds and scams (Articles 172 to 174, Criminal Code).

  • Extortion or blackmail (Articles 168 and 169, Criminal Code).

  • Fraudulent and negligent bankruptcy (Articles 176 and 177, Criminal Code).

  • Fraudulent insolvency (Article 179, Criminal Code).

  • Collusion with creditors (Article 180, Criminal Code).

  • False balance sheets (Articles 300 and 304, Criminal Code).

  • Manipulation of financial markets and misleading offer (Article 309, Criminal Code).

  • Crime of financial intermediation (Article 310, Criminal Code).

  • Customs Criminal Law (Law 22,415).

  • Environmental Criminal Law (Law 24,051).

  • Criminal Trade Mark Law (Law 11,723 and 22,362).

  • Foreign Exchange Criminal Law (Law 19,359).

  • Criminal Tax Law (Law 24,769).

In all these cases, except for negligent bankruptcy, the author's wilful misconduct is required, which at a minimum requires the possibility of committing the crime was presented and he was indifferent. In Argentina criminal liability is always principally incurred by individuals, while legal persons are subject to ancillary criminal penalties (see Questions 27). Attempts are usually punishable.

Enforcement

3. What are the regulator's powers of investigation, enforcement and prosecution in cases of corporate or business fraud and what are the consequences of non-compliance?

The relevant authorities for the investigation of corporate fraud generally follow the:

  • Criminal Procedure Code.

  • Relevant provincial procedural rules.

In addition, some special rules, such as the Foreign Exchange Criminal Law or the Criminal Tax Law confer specific investigatory functions on the Federal Administration of Public Revenue (AFIP) or the Central Bank of the Republic of Argentina (BCRA), to request information or ask the judge to issue precautionary measures or search warrants.

The regulatory bodies generally have the power to request reports from different public and/or private entities that may have relevant information. The following measures must be ordered by a judge:

  • All measures that interfere with fundamental rights, such as inviolability of the home or correspondence, including authorisations to intercept mail or issue search warrants.

  • Orders to directly control the company's management in order to avoid the commission of corporate fraud. While this power is rare in a criminal court, the General Inspectorate of Justice (PRC) has commonly ordered interventions in civil and commercial cases.

To start an investigation it is necessary to either file a complaint, or for the police authorities to discover the commission of the offence. The investigation phase could range between one and three years, depending on the complexity of the case, and could even be extended further, until the court decides to send the case to trial.

Although generally the authority of a judge is limited to a particular geographical area, the judge can apply the above measures outside their jurisdiction within Argentina. There are numerous cases in which local authorities grant various precautionary measures in cases of corporate fraud at the request of foreign judges.

Failure to comply with an order issued by the investigating authorities gives raise to penalties such as the charge of criminal contempt of authority (Article 239, Criminal Code). There is no justification for not responding to a request for information, with the exception of justifications arising general rules of confidentiality in cases where there is professional secrecy (this applies for lawyers and notaries).

Penalties

4. What are the potential penalties or liabilities for participating in corporate or business fraud?

Civil/administrative proceedings or penalties

Special civil or administrative procedures are not established for these cases, but each administrative authority (in the field of its competence) can take measures against the company that has committed these acts, for or example:

  • If the fraud is related to tax evasion the Federal Tax Agency or the local tax authorities can impose fines.

  • If the fraud is related to the public sale of shares the National Securities & Exchange Commission can ban the company's participation in the stock market.

Criminal proceedings or penalties

Each of the criminal acts mentioned in Question 2 provide a specific penalty for the offence. The penalties can be split into the following groups:

  • Those that refer to the individual committing corporate fraud consisting of fines, in some cases up to ten times the value of the offence, for example:

    • manipulation of financial markets and misleading offers;

    • financial intermediation;

    • Foreign Exchange Criminal Law

    • Customs Criminal Law;

    • Environmental Criminal Law.

  • Professional practice disqualification by removing the relevant licence (fraudulent and negligent bankruptcy).

  • Imprisonment in some cases, for example, in the cases of:

    • fraudulent and negligent bankruptcy;

    • fraudulent insolvency;

    • collusion with creditors;

    • false balance sheets;

    • manipulation of financial markets and misleading offer;

    • crime of financial intermediation;

    • Foreign Exchange Criminal Law;

    • Customs Criminal Law;

    • Environmental Criminal Law;

    • Criminal Trade Mark Law;

    • Criminal Tax Law;

The most severe punishments are for offences such as aggravated evasion (up to nine years) an environmental law (up to 25 if the acts results in the death of any person).

Penalties for legal persons are only intended for some specific offences, in the financial, tax, customs, foreign exchange and environmental areas. In these cases, the penalties include:

  • Fines of ten times the value of the offence.

  • Suspension of activities.

  • Suspension of the ability to participate in public tenders.

  • Cancellation of legal status.

  • Loss or suspension of governmental benefits.

Civil suits

Damages are the ordinary remedy available for liability in tort (see Question 1, Civil liability). Class actions are only possible in certain limited cases, such as consumer claims. These are the cases where a consumer protection association (among other possible plaintiffs) files a claim on behalf of an indefinite number of unidentified individual consumers under certain conditions. They do not generally apply to cases of corporate or business fraud. Similarly, punitive damages in Argentina are only applicable in cases involving consumer/user's rights (section 52, Argentine Consumer Defence Act).

 

Bribery and corruption

Regulatory provisions and authorities

5. What are the main regulatory provisions and authorities responsible for investigating bribery and corruption?

The Criminal Code is the main regulation that governs and punishes behaviours related to bribery and corruption. The Federal Court on Criminal and Correctional Matters is the competent court on bribery and corruption matters concerning public officers, and the National Constitution provides a special mechanism for removal and prosecution of officials and judges called impeachment.

There are no special procedures or guidance for investigating these crimes. However, the following institutions are important:

  • The Anti-Corruption Bureau. This operates under the Ministry of Justice, and is governed by National Decree 102/99, which grants various investigative powers (see Question 10).

  • Administrative Investigations, a special prosecutor's office within the Public Prosecutor. This investigates and promotes the investigation of crimes concerning corruption and administrative irregularities.

For more information on the Anti-Corruption Bureau and Administrative Investigations see box: The regulatory authorities.

 
6. What international anti-corruption conventions apply in your jurisdiction?

The UN Convention against Corruption 2003 has constitutional status and is in force in Argentina (Article 75, section 2, National Constitution). The Corruption Convention was ratified by Argentina in June 2006 and became effective under Law No. 26,097.

As a result, Argentina has taken on the obligation to make co-ordinated and effective policies relating to anti-corruption that (Article 5, sections 1 and 3, National Constitution):

  • Promote participation in society.

  • Reflect the principles of the:

    • rule of law;

    • proper management of public affairs and public property;

    • integrity, transparency and the obligation to render account.

Argentina must also evaluate its relevant legal instruments and administrative measures to determine whether they are adequate to combat corruption.

Argentina has also acceded to the Inter-American Convention against Corruption of 1996 through Law 24,759. This treaty:

  • Promotes and strengthens the development, by each of the state parties, of the mechanisms needed to prevent, detect, punish and eradicate corruption.

  • Facilitates and regulates co-operation among the acceding countries to ensure the effectiveness of measures and actions to prevent, detect, punish and eradicate acts of corruption in the performance of public functions, and specifically related to that performance.

Offences

7. What are the specific bribery and corruption offences in your jurisdiction?

Foreign public officials

Any person is punished with imprisonment from one two six years and special disqualification for life from the exercise of any public office if that person offers or gives a public official from a foreign state or from an international public organisation, personally or through an intermediary, money or any object of pecuniary value or other benefits such as gifts, favour, promises or benefits, for (Article 258 bis, Criminal Code):

  • That person's own benefit or for the benefit of a third party.

  • The purpose of having that official do or not do an act related to his office or to use the influence derived from the office he holds in an economic, financial or commercial transaction.

Domestic public officials

The Criminal Code is the main regulation that governs and punishes behaviours related to bribery and corruption, in particular Title XI (Crimes Against the Public Administration) that contains in Chapter VI various rules concerning bribery and corruption. In particular, it prohibits a public officer either personally or through a third party receiving money or any other gift, or accepting a direct or indirect promise to perform, delay or stop performing something related to his duties (Article 256, Criminal Code).

The offence of offering a bribe is also punished (Article 258, Criminal Code). The perpetrator must have a specific intent to commit wrongdoing, but damage is not necessary. It may be difficult to punish an attempt as the crime is generally carried out through accepting the promises or receiving the gift.

Private commercial bribery

Currently, the offence of bribery does not apply to bribery between private individuals, but only where government officials and employees are involved. The exception to this concerns the recent introduction of an offence of bribery for employees or officials of financial institutions (Article 312, Criminal Code). This provides that employees of financial institutions and entities operating in the stock exchange are punished from one to six years and special disqualification of up to six years if they personally, or through an intermediary, receive money or any other benefit as a condition to provide loans, finances or stock exchange transactions.

A Draft Reform of the Criminal Code is being considered, driven by the former Minister of the Supreme Court of Justice, Eugenio Zaffaroni, which will address bribery between private individuals (see Question 33).

Defences

8. What defences, safe harbours or exemptions are available and who can qualify?

Indirect bribery is covered under the offence set out in Article 256 bis (see Question 7, Domestic public officials). There are no safe harbours or exemptions and facilitation or "grease" payments (for routine government actions) are not allowed.

 
9. Can associated persons (such as spouses) and agents be liable for these offences and in what circumstances?

Associated persons are not considered principal offenders. It is possible to punish them as accomplices if they had facilitated the commission of the crime, in which case they are subject to receive the same penalty as the perpetrator.

Enforcement

10. What are the regulator's powers of investigation, enforcement and prosecution in cases of bribery and corruption and what are the consequences of non-compliance?

The Anti-Corruption Bureau has certain powers under National Decree 102/99, including powers to:

  • Request information.

  • Obtain expert opinions.

  • Conduct preliminary investigations.

  • File criminal complaints with the federal judiciary.

See Question 5.

Federal judges are assigned to conduct bribery and corruption investigations, and have broad powers under the Code of Criminal Procedure, including:

  • Requesting reports from both public and private agencies, which must comply, under criminal penalty for disobedience.

  • Order numerous procedural and precautionary measures, aimed at avoiding and preventing obstruction to investigations and the escape of criminals. These include:

    • lifting the secrecy order. Usually when information is requested from financial entities it is necessary that the judge first raise the bank secrecy that is contractually agreed between the banks and their customers. This does not mean disclosure of information concerning the suspects;

    • detaining the accused;

    • prohibiting an individual from leaving the country;

    • seizing and freezing assets;

    • issuing search warrants;

    • confiscating assets.

All national and provincial police forces are at the disposition of the Federal Judiciary, as court assistants, to perform, execute and/or comply with its orders.

The authority of a Federal Judge is limited geographically to Argentina. The authorities and judiciary co-operate in practice with overseas regulators.

The only protection provided is that some people may be required to answer written reports so as not to testify as witnesses. This applies to the President, Vice President, provincial governors, Mayor of the City of Buenos Aires, national and provincial Ministers and Legislators, members of the judiciary and provinces, Diplomatic Ministers and General Consuls, and senior officers of the armed forces (Article 250, Code of Criminal Procedure).

Penalties

11. What are the potential penalties for participating in bribery and corruption?

Civil/administrative proceedings or penalties

There are no special procedures (see Question 4, Civil/administrative proceedings or penalties). However, some administrative sanctions that are not fines or penalties may be applicable. For example, if it is proved that a contracting process involved briberies or corruption then, among others:

  • Those contracts can be declared null and void.

  • The company could be removed from the state registry of suppliers and contractors.

Criminal proceedings or penalties

The public officer who receives the gift or promise to perform, delay or stop performing something related to his duties is punished by imprisonment from one to six years and perpetual special disqualification from public office (Article 256, Criminal Code). The punishment only applies to individuals.

The individual who directly or indirectly gives or offers gifts in an attempt to cause a public officer to perform, delay or stop performing something related to his duties is also punished by imprisonment from one to six years (Article 258, Criminal Code). If the offender is a public officer he will be disqualified from two to six years

Tax treatment

12. Are there any circumstances under which payments such as bribes, ransoms or other payments arising from blackmail or extortion are tax-deductible as a business expense?

Argentine Income Tax Law does not explicitly prohibit the deductibility of bribes, ransoms or other payments arising from blackmail or extortion. It does specifically state that net losses arising from illegal operations are non-deductible (Article 88(j), Income Tax Law). In addition, the Argentine Government has stated before the OECD Working Group on Bribery in International Business Transactions (Follow-Up Report on the Implementation of the Phase 2 Recommendations, 3 September 2010) that the deductibility of bribes is implicitly prohibited by Argentine tax law.

There may be circumstances in which payments are deductible where the taxpayer was the victim of a crime. The Supreme Court of Argentina (Corte Suprema de Justicia de law Nación) (CSJN) has held that a ransom paid for the kidnapping of a director is deductible as an extraordinary loss provided that it has been duly proved (CSJN, "Roque Vasalli S.A.", 5 March 1982).

In order to deduct a ransom like this, the following conditions must be fulfilled (page 577, Impuesto a las ganancias, Editorial Depalma, Buenos Aires, 1976, Guiliani Fonrouge, Carlos M. and Navarrine, Susana C.):

  • The kidnapping must be proved before the judiciary or police authorities.

  • The victim of this crime must be considered essential for the development of the company, taking into account his activity or personal characteristics.

  • The payment of the amount demanded as ransom must be made by the company.

  • This payment must be duly proved.

Deduction of expenditure is not allowed if it is not supported by any documentation and it cannot be proved by other means that it was incurred to obtain or keep taxable information (this expenditure will also be subject to 35% tax). The Argentine Tax Authority (AFIP) challenges the deduction of payments that are not documented and clearly linked to the generation of taxable income. In such cases, the taxpayer must prove the existence of the expenditure and that it was genuinely incurred to obtain or keep taxable income.

 

Insider dealing and market abuse

Regulatory provisions and authorities

13. What are the main regulatory provisions and authorities responsible for investigating insider dealing and market abuse?

Market abuse operations are regulated by the National Anti-trust Law No. 25,156. The authority that investigates the breaches of that law is the National Commission for Anti-trust and its decisions are reviewed by the Court of Appeals of the National Financial Criminal Court.

The supply of inside information is sanctioned by Article 307 of the Criminal Code and Article 156 of the Criminal Code provides for the basic offence of breach of secrecy (see Question 14).

No best practice regulations or guidance have been issued.

For more information on the National Commission for Anti-trust see box: The regulatory authorities.

Offences

14. What are the specific insider dealing and market abuse offences?

The following offences are relevant:

  • Insider dealing (Article 307, Criminal Code). This applies to whoever by his employment, profession or function within a securities' issuer, directly or through a third party, supplies or uses inside information to which he had access during his activity, for the negotiation, quotation, purchase, sale, or liquidation of securities.

  • Market abuse (Article 156, Criminal Code). This applies to acts that in any way:

    • have the purpose or effect of limiting, restricting, faking or distorting competition or market access; or

    • constitute abuse of a dominant position in a market, so as to harm the general economic interest.

Such acts can include, for example:

  • directly or indirectly manipulating the sale or purchase price of assets or services offered in the market;

  • establishing obligations to market only a restricted or limited amount of assets, or provide a restricted or limited number of services;

  • horizontally dividing areas, markets, customers and sources of supply.

It is necessary to prove a specific intent of wrongdoing. It is not necessary to prove damage. Attempts are punishable.

Defences

15. What defences, safe harbours or exemptions are available and who can qualify?

Market abuse

There are no safe harbours or exemptions for market abuse. The Argentine Anti-trust Law sanctions acts or conduct aiming at or having the effect of limiting, restricting or distorting competition or access to the market and abuse of dominant position, in such a manner that may result in harm to the general economic interest. Unilateral conducts are usually sanctioned when there is considerable market power or a dominant position. However, the Argentine Anti-trust Law does not provide any guidelines as to what market shares give rise to the existence of a dominant position on one or several markets.

Insider dealing

There are no defences, safe harbours or exemptions to commission of insider dealing.

Enforcement

16. What are the regulator's powers of investigation, enforcement and prosecution and what are the consequences of non-compliance?

Market abuse

In relation to market abuse the Argentine Anti-trust Authority has full powers to (Anti-trust Law):

  • Perform studies and conduct investigations concerning market conditions. In this context, the Authority is authorised to request information and documents from: individuals; national, provincial or municipal authorities; consumer associations; and so on.

  • Hold hearings with allegedly responsible parties, claimants or damaged parties, witnesses and experts.

  • Request expert examinations on financial and corporate documents.

  • Conduct inspections.

  • Impose penalties.

  • Prosecute legal actions and file petitions for judicial injunctions necessary to the enforcement of the Anti-trust Law.

In addition, the Argentine Anti-trust Authority may order the defendant to comply with pro-competitive conditions or to cease anti-competitive conduct (section 35, Anti-trust Law).

The Anti-trust Authority can start an investigation on its own initiative or as the result of a complaint of a private party. The Authority will provide the defendant ten days to respond to the allegations. After receiving the response, the Authority must decide either to open the investigation or to dismiss the claim.

Where an investigation is opened, the defendant will be given 15 days to file a defence and offer evidence. He can also offer a commitment to stop the practice under analysis (before the final resolution has been issued), and the Authority can decide whether to accept that commitment.

Once the evidentiary stage is concluded, the Authority can impose a penalty (see Question 17, Criminal proceedings or penalties). Penalties imposed by the Authority can be appealed. The Authority does not provide a leniency programme.

The courts and/or regulator do not have extra-territorial jurisdiction.

Insider dealing

The crime of insider dealing is incorporated into the general system of the Criminal Code offences and therefore follows the usual rules for investigation and punishment, including the general rules of the Criminal Procedure Code (see Question 3).

Penalties

17. What are the potential penalties for participating in insider dealing and market abuse?

Civil/administrative proceedings or penalties

The Anti-trust Authority can, in cases of market abuse:

  • Impose an order to immediately end acts or behaviours and, if necessary, remove their results.

  • Impose a fine ranging from AR$10,000 to AR$150 million. In the case of re-offending, the amount of the fine will be doubled.

  • In the event of an abuse of dominant position, request the court to issue an order to divest assets or dissolve the company.

Criminal proceedings or penalties

The court can impose the following, in cases of insider dealing:

  • Imprisonment from one to four years.

  • A penalty equivalent to the amount of the prohibited operation.

  • Special disqualification from a regulated financial activity of up to five years.

Civil suits

Not applicable.

 

Money laundering, terrorist financing and financial/trade sanctions

Regulatory provisions and authorities

18. What are the main regulatory provisions and authorities responsible for investigating money laundering, terrorist financing and/or breach of financial/trade sanctions?

Money laundering and terrorist financing

Following the recommendations of the Financial Action Task Force (FATF) in June 2011, Law 26,683 was enacted. This Law amended the crime of money laundering and terrorist financing and included them in a special title in the Criminal Code concerning crimes against the economic and financial order.

The Financial Information Unit (FIU) is an agency that operates under the government. It is responsible for analysing and transmitting information concerning entities for the purposes of preventing and disrupting money laundering. It operates under the regulations of Law 25,246, which establish the FIU, its operation, investigatory powers, and penalties for non-compliance (see Question 21). The FIU has its own regulations for its preliminary investigations.

The First Instance Courts or Federal Courts, depending on the specific transaction and the people who participating it, are responsible for investigating and prosecuting the relevant offences (see Question 19). The Criminal Code in Article 305 provides the procedure for the judge to follow from the start of proceedings.

For more information on the FIU see box: The regulatory authorities.

Financial/trade sanctions

There are no regulations concerning breaches of sanctions on dealing with certain jurisdictions as such. There is the Hydrocarbons Law (No 26,659), which provides for criminal sanctions on anyone who engages in search and extraction of hydrocarbons without authorisation of the competent authority, through exploration in the territorial sea or in Argentina's continental shelf or reserves. This prohibition is understood to apply to the Islas Malvinas/Falkland Islands (British sovereignty). The Secretary of Energy is the regulatory authority in this area, and the federal courts have jurisdiction over any case.

Offences

19. What are the specific offences relating to money laundering, terrorist financing and breach of financial/trade sanctions?

Money laundering

An individual commits an offence if he or she converts, transfers, administers, sells, encumbers, conceals or otherwise puts into circulation in the market, assets derived from a criminal offence, with the possible consequence that the origin of the assets or their substitutes acquire the appearance of lawful origin (Article 303 and so on, Criminal Code). It is necessary to prove a specific intent of wrongdoing.

Attempts are punishable on the basis that any person who receives money or other goods resulting from a crime, with the purpose of applying them in any other operation that may give them the appearance of being from a legitimate source, is punishable with imprisonment of from six months to free years (Article 303.3, Criminal Code).

Terrorist financing

A person commits an offence if he or she, directly or indirectly, collects or supplies assets or money with the intention or knowledge of them being used, in whole or in part, to finance terrorist activity (Article 306, Criminal Code). It is not necessary for the terrorist activity to actually have taken place.

Financial/trade sanctions

Under the Hydrocarbons Law (No 26,659) it is an offence to engage in the search and extraction of hydrocarbons without authorisation of the competent authority, through exploration in the territorial sea or in Argentina's continental shelf or reserves (see Question 18, Financial/trade sanctions).

Defences

20. What defences, safe harbours or exemptions are available and who can qualify?

Money laundering

There is no safe harbour in the field of money laundering. However, the Criminal Code provides that if the transaction is for less than AR$300,000 the penalty will be reduced to imprisonment ranging from six months to three years and the offence will be considered a misdemeanour (see Question 22, Money laundering).

If penalties are imposed on a legal entity as an accessory (where the money laundering had been incurred for its benefit) the judge may take into account the implementation and monitoring of compliance programmes as a mitigating (although not exonerating) factor (Article 304, Criminal Code).

Providing information about other perpetrators or related offences is not a mitigating or exonerating factor.

Terrorist financing

If the terrorist offence that was financed had a penalty range that was lower than the penalty range for terrorist financing, the lower penalty range will be applied.

Providing information about other perpetrators or related offences is not a mitigating or exonerating factor (see Question 32).

Financial/trade sanctions

There is no safe harbour under the Hydrocarbons Law (Law No 26,659).

Enforcement

21. What are the regulator's powers of investigation, enforcement and prosecution and what are the consequences of non-compliance?

The First Instance Courts, Federal Courts, and the Financial Information Unit (FIU) investigate money laundering and terrorist financing and the breach of Hydrocarbons Law (Law No 26,659). They have broad powers to conduct their investigation, including the power to request reports from both public and private agencies, who must comply on penalty of committing the crime of disobedience. Non-compliance with the obligation to inform the FIU is punished by a fine of up to ten times the value of the assets or transaction that relates to the violation (Law 25,246). This penalty is imposed on both individuals and legal entities.

The procedure for the First Instance or Federal Judge is set out in Article 305 of the Criminal Code, including taking precautionary measures to ensure the safekeeping, administration, maintenance and disposition of assets that are the instruments, product, profit or result of crimes provided for in the other articles of the Criminal Code. The Federal Judges in particular have at their disposal numerous procedural and precautionary measures, aimed at avoiding and preventing investigations being obstructed and criminals helped to escape, for example:

  • Secrecy order.

  • Detention of the accused.

  • Prohibition from leaving the country.

  • Seizure and freezing of assets.

  • Search warrants.

  • Confiscation of assets.

All national and provincial police forces are at the disposal of the Federal Judiciary, as court assistants, to perform, execute and/or comply with its orders.

In money laundering operations the assets can be confiscated definitively without criminal conviction, when one of the following applies:

  • Their unlawful origin or the crime to which they are attached is proved.

  • The accused is unable to be prosecuted because of death, escape, expiration of prescription period or other grounds of suspension or termination of the criminal action.

  • The accused has knowledge of the source or unlawful use of the assets.

Seized assets are used to repair the damage caused to society, the victims or the government of the unlawful action.

Once the FIU or another party file a criminal complaint, and there is reasonable cause to consider that the offence was committed, the Federal Court will normally adopt precautionary measures immediately. In other circumstances it is necessary to make a formal complaint and apply to the court for an order.

Until the complaint is filed, the FIU is prohibited from disclosing the identity of the investigated person. The complaint will probably allow disclosure of data concerning that person, although it is a general rule that the content of the file is secret except from the parties.

The courts have no jurisdiction outside the country and they will depend on the co-operation of the courts of foreign jurisdictions. It is normal for Argentine courts to co-operate in this way.

Penalties

22. What are the penalties for participating in money laundering, terrorist financing offences and/or for breaches of financial/trade sanctions?

Money laundering

The penalty is both:

  • Imprisonment ranging from three to ten years.

  • A fine from two to ten times the amount of the transaction.

Aggravated offences will be punished with imprisonment from 4.5 years to 13.3 years. Offences will be aggravated by the status of the perpetrator as a repeat offender, his or her criminal association, or status as a public officer.

When the offence is made on behalf of, with the assistance of, or for the benefit of a legal entity, the following penalties are imposed on the entity, either jointly or as an alternative:

  • A fine ranging from two to ten times the value of the assets that are the subject of the offence.

  • Suspension of activities, either total or partial, for a maximum of ten years.

  • Suspension from participating in government tenders or bidding processes for public services or works or any other activity related to the Government (in no case for more than ten years).

  • Cancellation of legal status when created for the sole purpose of committing the offence or when those acts constitute the main activity of the company.

  • Loss or suspension of state benefits, if any.

Terrorist financing

The penalty is imprisonment, ranging from five to 15 years, and a fine from two to ten times the amount of the transaction. The same penalty applies to legal entities as for money laundering (see above, Money laundering).

Financial/trade sanctions

The penalty is either:

  • Imprisonment ranging from five to ten years.

  • A fine from 20,000 to 100,000 barrels of crude oil (each one of them with capacity of 42 US gallons)

An aggravated offence (where hydrocarbons had effectively been extracted) will be punished with imprisonment from ten to 15 years or a fine from 150,000 to 1.5 million barrels of crude oil.

 

Financial record keeping

23. What are the general requirements for financial record keeping and disclosure?

Certain specific subjects (regulated entities) have the obligation to inform and make available to the Financial Information Unit (FIU) (Article 21, Law 25,246):

  • Documentation collected from their customers.

  • The behaviour or activities of individuals or legal entities of an atypical situation which might suggest the existence of a suspicious act or transaction, money laundering or terrorist financing.

Knowledge of any suspicious act or transaction will make it compulsory to bring this act or transaction to the FIU's attention, within 150 days from the operation performed or attempted in cases of money laundering, and 48 hours in cases of terrorist financing (Article 21bis, Law 25,246). The regulated entities must keep the information for five years (Law 25,246).

In addition, the Code of Commerce provides that all traders must keep their (Articles 44 and 67, Code of Commerce):

  • Trade books until ten years after they cease trading.

  • Documentation that clarifies their management and financial position for ten years from their date (generally accounting books, in particular a daily journal and a general account book). Generally Accounting Books, especially Daily Journal an General Account Book.

 
24. What are the penalties for failure to keep or disclose accurate financial records?

A fine ranging from one to ten times the total value of the assets or operations to which an offence is related is imposed on (Law 25,246):

  • The person acting as a body or executor of a legal entity, or the individual who fails to comply with the reporting obligations before the Financial Information Unit (FIU).

  • The legal entity in which the offender works.

This is provided that the act does not constitute a more serious offence, such as money laundering.

When the real value of the assets cannot be established, the penalty will be from AR$10,000 to AR$100,000.

 
25. Are the financial record keeping rules used to prosecute white-collar crimes?

Law 25,246, which established the Financial Information Unit, provides that the information analysed must serve not only to prevent the crimes of money laundering and terrorist financing, but also the crimes related to:

  • Drug trafficking and illegal sale (Law 23,737).

  • Arms smuggling and drug smuggling (Law 22,415).

  • The activities of an illegal association (Article 210 bis, Criminal Code) or a terrorist conspiracy (Article 213ter, Criminal Code).

  • Crimes committed by illegal associations organised to commit crimes for political and racial purposes.

  • Crimes of fraud against public administration (Article 174(5), Criminal Code).

  • Crimes against public administration under Chapters VI, VII, IX and IX bis of Title XI of Book II of the Criminal Code.

  • Crimes related to child prostitution and child pornography (Articles 125, 125bis, 127bis and 128, Criminal Code).

  • Extortion (Article 168, Criminal Code).

  • Tax crimes.

  • Human trafficking.

 

Due diligence

26. What are the general due diligence requirements and procedures in relation to corruption, fraud or money laundering when contracting with external parties?

The due diligence requirements vary, but generally they involve:

  • The investigation of possible criminal actions in which the legal entity or any of its officers was involved, usually in investigations of acts of corruption before the Federal Courts, corporate fraud and/or tax frauds.

  • A detailed analysis of the control mechanisms implemented by the company and its actual functionality, such as:

    • fraud detection systems;

    • internal complaints systems;

    • consistency and effectiveness in audits;

    • policy of understanding of the use of e-mail by employees; and

    • hiring policies.

If the company is a regulated entity (see Question 23), the regularity of the reports to the Financial Investigation Unit (FIU) and the existence of manuals and training courses to employees will be monitored.

 

Corporate liability

27. Under what circumstances can a corporate body itself be subject to criminal liability?

Accessory criminal penalties may be imposed when the criminal offence had been made ​​on behalf, or with the intervention, or for the benefit of a legal entity (see, for example, Question 20, Money laundering). Accessory criminal penalties are not imposed on legal entities for all crimes, but only for economic financial crimes, tax crimes, foreign exchange crimes, environmental crimes, and crimes concerning customs.

 

Immunity and leniency

28. In what circumstances is it possible to obtain immunity/leniency for co-operation with the authorities?

There are no laws concerning obtaining immunity/leniency for co-operation with the authorities except in relation to whistleblowers under the Law of Narcotics No. 23,737 (see Question 32).

 

Cross-border co-operation

29. What international agreements and legal instruments are available for local authorities?

Obtaining evidence

Law 24,767 has been in force in Argentina since 1997, and provides the foundation for the system of international legal co-operation on criminal matters. It provides the rules of procedure applicable for international legal assistance and extradition received by Argentina. In addition, in cases where there is no treaty binding Argentina with the requesting government, it establishes the conditions under which the assistance will be awarded, which are, in general terms:

  • The crime that motivates the extradition process cannot be a political crime.

  • The crime that motivates the extradition process cannot be exclusively envisaged by the military criminal law.

  • The process that motivates the extradition could not show persecutory purposes for reasons of political opinions, nationality, race, sex or religion.

Criminal assistance will be provided even if the offence that motivates the extradition process has not been provided in Argentinean law.

In addition, several bilateral and regional international treaties have been entered into which provide rules for mutual assistance on criminal matters, including for example obtaining evidence.

Seizing assets

Law 24,767 does not establish a specific mechanism concerning seizing assets. However, for this type of measures, which may affect rights protected by the National Constitution (such as the right to property), the law sets out that an offence should be provided for under the Argentinean law and the order should be issued by a judge, for matters such as:

  • A house search.

  • Surveillance of individuals.

  • Interception of correspondence or communications.

See above, Obtaining evidence.

Argentina has entered into the UN Convention against Corruption through Law 26,097, which enables confiscation of proceeds of crime and property or othe items used for offences under the Convention (Article 31).

Sharing information

Law 24,767 provides mechanisms for mutual criminal assistance (see above, Obtaining evidence).

 
30. In what circumstance will domestic criminal courts assert extra-territorial jurisdiction?

Article 1 of the Criminal Code establishes the principle of territoriality, stating that the Code applies to:

  • Crimes committed or consequences from crimes that occur in:

    • the territory of the Republic of Argentina;

    • areas subject to Argentina's jurisdiction.

  • Crimes committed abroad by agents or employees of Argentinean authorities in performing their duties.

However, Articles 303 and 307 of the Criminal Code concerning money laundering and terrorist financing provide that they will apply even when those crimes were committed outside the scope of the Criminal Code when the fact that forms the basis for that crime had been punished in the place where it was committed (see Question 19).

 
31. Does your jurisdiction have any statutes aimed at blocking the assertion of foreign jurisdictions within your territory?

There are no rules restricting compliance with investigations started in other countries where those acts are not being investigated in Argentina.

The Extradition Law does provide for a "national option". This means that if the extradition of an Argentinean citizen is required, the citizen may opt to be placed on trial in Argentina (as long as a bilateral treaty does not provide otherwise).

Finally, the Extradition Law restricts international co-operation in the field of political crimes.

 

Whistleblowing

32. Are whistleblowers given statutory protection?

In Argentina the system of witness protection is regulated by the National Programme for Witnesses and Suspects Protection created by Law 25,764, which is administered by the Secretariat of Justice under the Executive Power.

The system is intended for the protection of witnesses and defendants (either those who are co-operating or repentant criminals) who have made ​​an outstanding contribution to a judicial investigation under federal jurisdiction and are therefore in a risky situation. Such investigations can include investigations into:

  • Drug trafficking.

  • Kidnapping and terrorism.

  • Crimes against humanity committed in the period 1976 to 1983.

  • Human trafficking.

The whistleblowing system does not reduce penalties, except in the case of crimes regulated by the Law of Narcotics No. 23,737, where co-operation can reduce penalties up to one-half of the minimum, or even exempt the whistleblower from penalties when, during the conduct or before the start of the proceedings, the whistleblower either:

  • Reveals the identity of the participants in the crime.

  • Provides information enabling the authorities to seize drugs, raw materials and other objects of the crime.

 

Reform, trends and developments

33. Are there any impending developments or proposals for reform?

The draft of the new Criminal Code is currently in parliamentary discussions. This does not include significant reforms for this kind of crimes. In addition, a new offence of bribery between private individuals will be introduced (see Question 7).

 

Market practice

34. What are the main steps foreign and local companies are taking to manage their exposure to corruption/corporate crime?

To avoid or minimise the risk of corporate fraud or acts of corruption, companies should:

  • Establish codes of ethics with clear anti-corruption and transparency policies.

  • Establish controllable and transparent processes for high-risk sectors of the companies such as the purchase department, financial department or institutional relationships.

  • Practice due diligence concerning suppliers, and require the same processes and controls in accordance with the standards of transparency and quality of the company.

  • Designate and grant high powers to compliance officers that regularly report to headquarters.

  • Conduct regular internal and external audits through leading companies.

  • Have privacy policies in relation to work tools (e-mails, computers, and so on) that legally enable them to monitor and review those items without incurring breaching constitutional rights.

  • Provide internal training courses, and hire outside consultants to provide legal and regulatory updates on emerging issues.

 

The regulatory authorities

Federal Administration of Public Revenue (Administración Federal de Ingresos Públicos) (AFIP)

W www.afip.gob.ar

Status. Governmental entity.

Principal responsibilities. AFIP is responsible for:

  • Applying, collecting and enforcing federal taxes.

  • Implementing legislation relating to the import and export of goods.

  • Traffic control of goods entering or leaving the customs territory.

Central Bank of the Republic of Argentina (Banco Central de la República Argentina) (BCRA)

W www.bcra.gov.ar

Status. Governmental entity.

Principal responsibilities. The BCRA's main goal is to create the necessary conditions to develop and strengthen financial stability through an appropriate regulatory framework.

Office of the Prosecutor for Economic Crime and Money Laundering (Procuraduría de Criminalidad Económica y Lavado de Activos) (PROCELAC)

W www.mpf.gob.ar/procelac/

Status. Governmental entity.

Principal responsibilities. PROCELAC's goals include:

  • Receiving complaints calling for new preliminary investigations.

  • Developing an active case-oriented practice.

  • Assisting public prosecutors on different kinds of cases.

  • Designing politics to prosecute economic crime.

Financial Information Unit (Unidad de Información Financiera) (FIU)

W www.uif.gov.ar

Status. Governmental entity.

Principal responsibilities. The FIU, to combat money laundering and terrorism financing, receives and analyses reports of suspicious operations from financial institutions and other regulated entities in Law 25,246. If, as a result of its analysis, the FI determines that there is sufficient cause to confirm the suspicious nature of the reported operation, the FIU will communicate the results of its analysis to the Ministry of Public Prosecutors, who will decide whether there are grounds to start criminal proceedings.

Anti-Corruption Bureau (Oficina Anticorrupción)

W www.anticorrupcion.gov.ar

Status. Governmental entity.

Principal responsibilities. The Anti-Corruption Bureau was created by Law No. 25,233 in 10 December 1999. Its main objective is to conduct investigations of corruption involving public officials. The investigations are based on complaints made by citizens, the media, and other public agencies, or at the Anti-Corruption Bureau's own initiative.



Online resources

Información Legislativa y Documental (InfoLEG)

W http://infoleg.gov.ar

Description. InfoLEG is a legislative database. The documents on the site are in Spanish, and no English translations are available.



Contributor profiles

Manuel Beccar Varela, Partner

Estudio Beccar Varela

T +54 11 4379 4783
F +54 11 4379 6869
E manuel@ebv.com.ar
W www.ebv.com.ar

Professional qualifications. Argentina, Lawyer. Law Degree, Universidad de Belgrano, 1994; Postgraduate Degree in Criminal Law, Universidad Austral, 2003

Areas of practice. Head of White Collar and Corporate Crime Department.

Professional associations/memberships.

  • International Bar Association

  • Buenos Aires Bar Association


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