1. Trying to figure it out can be costly

 There is a common pattern, when new legislation is passed, that the in-house legal team of a corporation will spend some time trying to figure it out until eventually, they realize it is a lot more complicated than they had first imaged, and so they outsource the work and life goes on. This works fine when, for example, a company is required to draft a commercial agreement and realizes the terms need to subject to the local laws, for which they have no specialized knowledge and so outsource. This all happens prior to the contract coming in to existence.

With compliance, things were somewhat different. The in-house legal team, upon drafting compliance measures, are not provided anything by way of immediate feedback, as in the example of a contract, where they would receive instructions on where to improve. For compliance, the realization may only come too late, once an investigation has been initiated in to non-compliance.

To be clear on matters, a successful compliance programme in Spain is not simply based on drafting a compliance documents with suggestive measure to ensure compliance. Rather, compliance (compliance penal) requires an assessment of the circumstances within the company that could result in the occurrence of criminal conduct, assessing the likelihood of the crime being committed, setting up preventative measures and enforcing compliance with measures such a complaints channel (canal de denuncias). Failure to implement an adequate compliance programme can leave the in-house legal team wishing it had outsourced the work of compliance, rather than spend time trying to figure it out.


  1. 4344260488_03a5c129e8_bIf you think you’ve figured it out and you’re wrong, it could land you in the Criminal Courts

 Compliance in Spain carries a criminal liability risk for the company, but it also carries a criminal risk for the legal professional. If we take the example of anti-money laundering (AML), the law states that legal professionals are required to comply with measures to prevent money laundering (art 2, Ley 10/2010 de prevención del blanqueo de capitales), and if such a professional fails in their obligation, they may be deemed to have been participant to the money laundering or criminally imprudent (art. 301 Código Penal).

If the in-house legal professional was handling the compliance programme when an investigation in to money laundering occurs, and it transpires that the legal professional has performed defective work in preventing the occurrence of a crime, this may be deemed as evidence of the criminal engagement of the legal professional in the execution of the crime.


  1. Compliance is time-consuming

 In order to implement measures which prevent Corporate Criminal Liability (art 31 bis Código Penal), the compliance programme must be able to create a map of the potential risks that a criminal act could be committed within the organization, understand how the decision-making process happens within the company, an understanding of how the company’s finances are managed, setting up a channel for anonymous reporting of compliance breaches and disciplinary measures. These measures, which are time consuming to set up, also requires periodic checks to ensure the company is compliant.


  1. Compliance is new

 The introduction of Criminal Liability of Corporations in Spain was first introduced in 2010, through a repeal of the Criminal Code (art 31 Ley Orgánica 5/2010, de 22 de junio) and later modified in the Criminal Code repeal of 2015, which provided for grounds for a defence when compliance procedures were set in place (art 31 bis, Ley Orgánica 1/2015, de 30 de marzo). In addition to the legislative reform, we have seen the first cases of jurisprudence in the courts in 2016 (STS núm. 154/2016 y STS 221/2016), which have helped shed light on the matter of Criminal Liability of Corporations.

This is all new, meaning there is no standardized that in-house legal can use in order to save time with the work of compliance and can normally take at least two years before things begin to appear standardized. The fact that it is also new also leaves room for a lot of errors to be made by professionals who may not be particularly experienced with the requirements set out in the law.


  1. Compliance requires specialized knowledge in Criminal Law

The in-house legal team is typically trained in contracts drafting and other areas relating to commercial law. They are not, generally speaking, specialists in Criminal Law. However, for Compliance to be done effectively in Spain, it requires a legal professional with specialized knowledge in the criminal law and who can keep abreast of the legal developments through the legislative reforms and jurisprudence in the courts. Whilst the role of compliance may seem tempting to hand to the in-house legal, failure to have the right legal professional, that can act independently and is experienced in criminal law, can often mean the company does not have measures that are compliant and is at risk of being found criminally responsible, when a criminal offence occurs within the organization.

Thoughts for Multinational Corporation (MNCs) in Spain

 The Compliance requirements in Spain has the potential to impact multinational corporations the hardest, with the volume of transactions and complexity creating room for risk of a breach in compliance to occur. Multinationals should not only count on an in-house team to address these risks but also a law firm specialized in Compliance like us.

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