Court Affirms Limits on Corporate Criminal Liability

Chamber A of the Federal Court of Appeals in Economic Criminal Matters recently overturned the indictment of an LLC accused of smuggling (Case CPE 703/2019/5), affirming a key principle of corporate criminal liability: legal entities can only be held criminally responsible when, in addition to a crime committed by their employees or representatives, there is clear evidence of an organizational failure that enabled or facilitated it.

The Court emphasized that corporate criminal liability cannot be automatic or objective. To charge a company, the prosecution must prove that the company’s internal structure—through action or omission—allowed the company’s assets or framework to be used for criminal purposes.

This decision highlights the strategic importance of effective compliance programs. Companies that can demonstrate real and functioning integrity systems—including enforcement, training, and internal investigations—will be better positioned to defend themselves against criminal liability when wrongdoing occurs. Conversely, the lack of such systems may become the very basis for criminal charges. In short, compliance is no longer a formality: it is now a core element of corporate criminal defense.