Law 21.595: Modernizing the Chilean Criminal Code
Season 5 Episode 04
Transcript
Juan José Ríos (Host): According to Senator Matías Walker, Law No. 21,595, published on August 17, 2023, is conceived as a necessary step to modernize the Chilean Penal Code and align it with current international regulations in the United States and Europe.
This regulation represents a substantial change in the way economic crimes are addressed in Chile and has a direct impact on corporate governance.
In general terms, a person who commits a crime faces legal liability. However, this law introduces greater liability when executives actively participate in a crime, increasing the risk of conviction for them.
In addition, it systematizes economic crimes and environmental offenses, regulates applicable penalties, and establishes new consequences for those responsible.
The law came into effect upon publication, with the exception of the amendments to Law 20,393 on the criminal liability of legal entities, which came into force on September 1, 2024.
How are you? I'm Juan José Ríos. Welcome to Mundo Financiero Seguro, the Plus TI podcast.
In this chapter, we will analyze Law 21,595 and its impact on Chile.
Today we are joined by:
- José Ignacio Camus, Founder, Partner, and COO of Admal Compliance, a consulting firm specializing in regulatory compliance. He joins us from Chile.
- Raúl Castellanos, AML Product Manager at Plus TI, from Guatemala.
Thank you both for joining us.
José Ignacio Camus: Thank you, Juan José.
In Chile, there were several cases of irregular financing of political campaigns—such as the Penta, SQM, and Corpesca cases—in which executives improperly financed political campaigns. Although they were prosecuted, they did not receive effective penalties.
The legislation in force at that time, Law 20,393, did not allow for the effective prosecution of legal entities or all the individuals involved.
These cases generated strong social discontent, especially after other highly publicized scandals, which prompted the need to strengthen the criminal liability of both companies and their executives.
The new law introduces:
- New crimes
- New effective penalties
- New fines
- New categories of crime
This significantly expands the scope for criminal prosecution.
José Ignacio Camus: It is called the Economic Crimes Act because it systematizes and expands the list of financial and economic crimes. Previously, there were isolated provisions in specific laws, such as the Securities Market Act, but there was no comprehensive classification.
With this law:
- More than 200 crimes are added to the list applicable to legal entities and individuals.
- Penalties are increased.
- Corporate criminal liability is strengthened.
Currently, under Law 21,595, a company that commits a crime covered by the law may even be dissolved, and its executives could face actual prison sentences.
Juan José Ríos: Raúl, how important is it to have an automated system to comply with this law?
Raúl Castellanos: It is essential. We are talking about a broad law with multiple elements that must be managed on an ongoing basis. Without automated systems, the risk of non-compliance increases significantly.
I identify five essential elements:
- Robust corporate governance, based on the three lines of defense and with a strong "tone at the top."
- Dynamic regulatory compliance, taking into account the type of activity carried out by the company.
- Management of labor or occupational fraud.
- Anti-corruption and anti-bribery policies.
- Robust anti-money laundering processes.
Managing all of this manually is unfeasible. Automated systems are required to enable continuous monitoring, real-time validation, and effective control.
José Ignacio Camus:
The main changes are:
- Inclusion of more than 200 crimes.
- Significant increase in penalties.
- Possibility of closure or dissolution of companies.
- Direct personal responsibility of managers.
- Introduction of the concept of "due control."
Proper control requires implementing:
- Code of ethics and best practices.
- Risk identification and management system.
- Internal control mechanisms.
- Complaints channel.
- Training programs.
The law now applies to companies with annual revenues exceeding 25,000 UF, significantly expanding the universe of regulated entities.
Raúl Castellanos: The law requires an effectively implemented crime prevention model.
It is not enough to have policies on paper. What is required is:
- Risk-based approach.
- Identification of critical processes.
- Implementation of robust internal controls.
- Secure and confidential reporting channels.
- Whistleblower protection.
- Continuous monitoring with risk indicators.
- Continuous improvement.
Furthermore, it is essential to balance regulatory compliance with business growth.
José Ignacio Camus: The law introduces the "daily fine penalty."
If a person is sentenced to prison, they must also pay a daily fine proportional to their income. The amount may be adjusted according to actual economic capacity.
Fines increased significantly compared to the previous regime.
For companies, in addition to traditional penalties such as loss of tax benefits or prohibition from contracting with the State, the possibility of dissolution of the legal entity is now included.
Likewise, illegally obtained profits must be returned.
José Ignacio Camus: Directors and executives must act immediately. The law changes the rules of the game. It is not just a matter of punishing, but of preventing and strengthening the transparency of the Chilean economic system.
Companies must implement compliance plans that are appropriate to their circumstances, with adequate resources, structure, and effective training.
As President Gabriel Boric pointed out during the enactment of the law: special treatment for those who commit economic crimes is over.
Raúl Castellanos: Implementation takes time. The law raises Chilean regulatory standards to the level of markets such as the United States and Europe, which also represents an opportunity for international competitiveness.
Compliance is not just about mitigating risks, but also about preparing to compete in global markets.
Juan José Ríos: Today we analyze the importance and impact of Law 21,595 on the modernization of the Chilean Penal Code and its repercussions in the business and environmental spheres.
A new chapter is beginning in the quest for greater transparency and corporate accountability.
Thank you for joining us on this episode of Mundo Financiero Seguro.
I'm Juan José Ríos.
Until next time.
