R&C: How would you characterise the level of fraud risk that can arise from third-party relationships in today’s business world?

López Alonso: The level of third-party fraud risk depends on the size of the company, the type of transactions it carries out, government involvement, clients and suppliers. Failures of control are much more likely to occur in companies with a lot of employees. The kind of transactions conducted is also important, since entities such as construction companies and government suppliers are more susceptible to third-party fraud or acts of corruption. Mexican law was recently amended so that, today, a company can be held criminally liable for a felony committed in its name or for its benefit. Therefore, more than ever, companies should take care when choosing the third parties they do business with, including clients, suppliers and advisers. Since the aforesaid amendment to the law encourages prevention and compliance, many companies in Mexico are putting stricter internal controls in place order to avoid incurring criminal liability and so as to reduce the risks of third-party fraud. Nevertheless, companies in Mexico will continue to face high exposure to third-party fraud, and related sanctions, until they implement adequate compliance programmes.

Oct-Dec 2018 Issue

Zinser, Esponda y Gomez Mont, Abogados