A recent article(1) examined the corporate criminal liability set out in the Law of Environmental Crimes (9,605/1998) and addressed its restrictive regulation and the expansive way in which prosecutors and courts have tended to apply it. This is the sole regard in which Brazil's legal system – which has long been focused on individuals – establishes a regime of corporate criminal liability.
However, that assertion does not mean that in the wake of criminal proceedings targeting individuals, companies may not be subject to certain precautionary measures undertaken by law enforcement authorities and regulated in different sections of the Code of Criminal Procedure. Indeed, some inflictive measures (eg, search and seizure of documents and freezing of assets, phone or other communications wiretapping and breach of bank and tax secrecy) can be ordered against a legal entity in the context of criminal investigations or lawsuits against individuals whose personal or (more especially) business relationships connect them to the company and suggest that it has benefited from – or been used as a means to commit – alleged misconduct.
Depending on the sector to which a company belongs, it may also have to deal with requests and orders issued by chiefs of police, federal and state prosecutors and judges aimed at obtaining data relating to individuals under investigation. This can be a tricky issue in a country whose public servants have shown a considerable level of undue activism, and it has particularly affected technology companies (eg, internet and email providers and social networks), telecoms companies, power distribution companies and hotel chains, among others. Brazil's recent General Law of Data Protection (13,709/2018) is expected to play a crucial role in this field when it enters into force in early 2020.
Moreover, corporations subject to the Anti-money Laundering Act (9,613/1998) must put policies and procedures in place to prevent money laundering – which includes the identification and maintenance of accurate records of customers and of their transactions – and report suspicious transactions to the relevant regulators. The Anti-money Laundering Act applies primarily to:
- financial institutions;
- brokerage firms;
- stock markets;
- insurance companies;
- leasing companies;
- factoring companies;
- real estate agents; and
- traders of jewellery and other luxury goods.
Despite the fact that corporate criminal liability is limited in Brazil, companies can be held liable at the administrative and civil levels for criminal offences that also amount to violations of antitrust and anti-corruption laws, not to mention other legal areas (eg, banking and securities regulations and environmental laws).
It should be noted that Brazilian law's limited establishment of corporate criminal liability does not mean that companies cannot be seriously affected by criminal law enforcement and subject to an extensive range of substantive and procedural matters. Companies' executive boards are not always prepared for such matters, which – especially when criminal investigations attract considerable media attention – can also raise serious and costly reputational issues. As such, it is now more important than ever that companies in all corporate sectors implement effective compliance programmes and – above all – seek permanent and highly skilled legal advice.
For further information of this topic please contact Rogério Fernando Taffarello at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados by telephone (+55 11 3147 7600) or email ([email protected]). The Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados website can be accessed at www.mattosfilho.com.br.
Endnotes
(1) For further details please see "Corporate criminal liability under Law of Environmental Crimes".
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