"Compliance" is a term from Anglo-Saxon law that literally translates into "fulfillment".

That is, it consists of a discipline or branch of law that seeks to implement processes, policies, strategies and tasks within organizations, as line of defense to avoid sanctions, fines, financial losses or loss of reputation, as a result of non-compliance with laws, regulations, self-regulation norms, or codes of conduct that apply to their activity

These measures are also intended to detect, reduce, and amend risks of illegality in company activities.

Compliance programs have two main aspects, one ethical and one structural:

In the Code of Conduct, the company communicates to its employees and managers the fundamental values that should govern its commercial operation; essentially, what's right and what's wrong. The basis of this Code is the tone and attitude that business supervisory bodies want to convey to their employees and managers about potential bad practices.

The Compliance Manual sets out in detail the operation of internal policies, roles, competencies, and powers by which self-regulation will be implemented and executed. This aspect of the compliance chart is based on seven essential pillars:

1. Processes and procedures: Create standards, processes, and procedures to prevent and detect illegal behaviors.

2. High-level monitoring: The implementation and execution of the Program should be supervised by senior hierarchical personnel.

3. Exclusion of bad actors: Demands due diligence on employee backgrounds to prevent those who have committed bad practices from obtaining positions with decision-making power.

4. Communication: Eectively transmit the Program's policies and procedures at all levels of the workforce and to other interested third parties, such as contractors and suppliers.

5. Continuous monitoring: Take reasonable steps to monitor, detect and report any unlawful practices or misconduct, and to audit the Program. The Program should ensure that there are mechanisms in place to allow employees and managers to report irregularities anonymously and without risk of retribution.

6. Implementation: Implement the Program consistently, balancing incentives and disciplinary measures to prevent and detect unlawful misconduct and practices.

7. Self Reporting: Periodically assess the risks of unlawful misconduct and behavior and, when detected, take appropriate measures to prevent recurrence.

Since 2014, Mexico has regulated the criminal liability of legal entities.

While previously only natural persons could be punished for the commission of a crime, it has expanded to include all kinds of organizations. This occurs when one of the employees, legal representatives or directors commits a crime for the benefit of the corporate entity or, uses it as a means to commit an illicit act.

The penalties provided for corporate entity who are convicted of being responsible for a crime are:

• Fines
• Closure of premises and establishments
• Prohibition of certain activities
• Temporary disqualification to participate in public procurement
• Judicial intervention
• Dissolution

In order to prevent these consequences, it is necessary for corporate entities to implement a tailor-made compliance program, which analyzes the risks of the commission of crimes within them and takes reasonable sufficient measures to prevent it, depending on their activities.

The design, implementation and execution of a criminal compliance program is developed in the following steps:

1. Detection of internal and external risks of the organization: Based on corporate documents, nature of the business, operational reality and testimonials of employees and managers, vulnerable areas, and operations in which criminal conduct could be developed are identified.

2. Prioritization of risks: Once detected, according to their severity, immediacy and scale, the risks whose reduction is a priority are identified. No compliance program can eliminate all risks within the organization, so it should focus on reducing those that pose the greatest threat to it.

3. Design of policies and procedures: Based on the seven pillars of compliance, a Compliance Manual is developed, setting out guidelines for corporate governance within the organization, to address and reduce the risks identified. These policies and procedures should be designed in such a way as to enable the organization to carry out its activities efficiency and honestly.

4. Implementation and dissemination: Once the compliance program has been designed, its operation begins. It is essential to the success of any self-regulatory scheme to train sta on the policies and processes established and bring them closer to the culture of compliance.

5. Periodic Monitoring and Evaluation: The efficiency and effectiveness of the Program should be regularly evaluated to detect any failures in the policies or processes established. This also serves to detect new risks or give dierent priority to risks already detected.

Corruption is an evil deeply rooted in Mexico that affects all aspects of our economy and society.

Not only is it immoral, but it's bad for business. It detracts from public confidence in the integrity of a market system, directs resources to inecient organizations in terms of price, quality and service, and provides perverse incentives to other honest organizations to lower their ethical standards in order to compete.

To prevent this, it is necessary to establish within organizations an ethical culture of zero tolerance to corruption.

Employees, managers, and directors should be trained so that the ethical values of the organization are not compromised in exchange for short-term results.

Policies and procedures that combat the payment of bribes, or gifts, influence-tracking, and any other irregular behavior in dealing with the authorities of the three orders of government should be implemented.

Any organization that, by its business model, requires interacting with government authorities in obtaining permits or public contracts, must have a compliance program focused on preventing corruption in the development of its activities. Failure to do so can result in administrative and criminal sanctions.

All organizations need to act with due diligence to monitor their employees, operations, suppliers, and contractors in any interaction with government authorities.

Compliance with money laundering prevention (PLD*) and terrorist financing (FT*) is generally based on the "know your client" principle. In the prevention of money laundering, due diligence is necessary to know the origin of resources, terrorist financing cares about its destination.

In both cases, organizations (especially those that are subject to the General Law for the Prevention and Identification of Operations with Resources of Illicit Origin) must have a Program that recognizes and mitigates at least the following risks:

1. Products and services: Those products or services which allow for the anonymity or lack of identification of the customer, and/or which allow for high-value transactions or that facilitate the transfer of significant amounts.

2. Type of clients and/or users: It should be considered whether the main clients of the organization are natural persons, corporate entities or trusts and their characteristics, such as age, date of incorporation, nationality, residency and economic activity.

3. Countries and geographical areas: Certain operations from countries and/or regions which, due to their socio-economic status, increase the susceptibility of coming from money laundering or are intended for the financing of terrorism, such as:

a. Tax havens
b. Countries with deficient measures in matters of PLD and FT
c. Countries with a high level of corruption
d. Regions with high incidence of organized crime
e. Regions with high level of marginalization
f. Border or port regions

4. Transactions and sending or distribution channels linked to the organization's operations: Those aspects of organizational productive work that allow non-face-to-face transactions, channels with immediate access to resources and channels that allow high-level monetary transactions. Also consider transactions allowed in foreign currencies.

With regard to PLD and FT compliance, the risks to organizations are significant, since, without a robust program, they may find themselves implicated in and charged as part of Organized Crime networks, for the commission of such crimes.

In general, every organization seeks to be lucrative or solvent enough to achieve the purposes for which it was created.

That's why it's natural to seek to reduce operating costs throughout the business model. As part of this reduction, many organizations choose to consult tax law experts to find a lawful way to reduce their tax burden. However, there are fiscal strategies which are more aggressive than others.

In order to avoid the possible imposition of administrative and criminal sanctions for an excessively aggressive tax strategy, it is important that the organization has a program that tempers the risk of tax evasion, and closely monitors the registration and transparency of ledgers and expeditiously reports any irregularities.

In most cases, an irregularity detected in time by an organization may be reported to the tax authorities for discounts on the payment of any debit and inhibit their willingness to seek criminal sanctions before the Public Prosecutor's Office.

Since 2017 Mexico has made a series of changes in labor legislation resulting in laws that are totally different to the labor legal scenario that has prevailed for almost five decades.

In fact, the Constitutional Reform, the labor chapters of the Trans-Pacific Partnership Agreement, and of the new Trade Agreement between Mexico, Canada and the United States (USMCA); the 98 Agreement of the International Labor Organization; the Reform to the Federal Labor Law issued on May 1, 2019 (Labor Reform) and the recently issued NOM-035-STPS all represent an institutional and labor structure that, if not carefully scrutinized, will cause serious problems to companies in their capacity as employers. And these changes also present formidable challenges for the labor authorities, for the unions, for the new labor law courts, and, most importantly, organizations.

By virtue of the above considerations, it is recommended that apermanent, specialized consultancy be provided to different companiesand organizations to ensure complete compliance with the new laws, and to make the most of the advantages these bring.

It is important to bear in mind that non-compliance with the above (and many other laws) could have national as well as international consequences. The USMCA rules are overly strict and can cause that certain companies' products are not imported at all, and even bring about the imposition of arbitration panels, including the presence of international observers.