The Federal Supreme Court recently clarified that the criminal liability of enterprises is not a strict liability, but rather requires proof of a criminal offence in each case. This also applies to the criminal liability of an enterprise due to failure to implement organisational measures to prevent certain white collar crimes from being committed. The decision defines the limits of criminal law applicable to enterprises, particularly in respect of money laundering.
Criminal liability of corporations
Since 2003 enterprises can be held liable for criminal offences committed in the exercise of commercial activities in accordance with the objects of the enterprise (Article 102 of the Criminal Code). The enterprise may be fined up to Sfr5 million.
On the one hand, criminal liability of an enterprise is triggered if an offence cannot be attributed to a specific natural person due to the inadequate organisation of the enterprise (second-degree liability, Article 102(1) of the code). The enterprise is charged for the organisational shortcomings that prevent the detection of the criminal offence (underlying offence).
On the other hand, an enterprise may be held criminally liable for specific white collar crimes if it has failed to take all reasonable organisational measures required to prevent such an offence from being committed (genuine, cumulative, or concurrent liability, Article 102(2)). In such an instance, the enterprise would be charged for the organisational shortcomings which resulted in the offence being committed. The criminal code sets forth an exhaustive list of white collar crimes which an enterprise has the duty to prevent:
- criminal organisation;
- financing of terrorism;
- money laundering;
- bribery or granting an advantage to Swiss public officials;
- bribery of foreign public officials; and
- bribery of private individuals (which is prosecuted ex officio since July 1 2016).
As regards the criminal liability of an enterprise for money laundering (Article 102(2) in connection with Article 305bis of the Criminal Code), on October 11 2016 the Federal Supreme Court issued a landmark decision defining the limits of criminal law applicable to enterprises (6B_124/2016, awaiting official publication).
The criminal liability of an enterprise requires that the underlying offence has been committed (ie, that the objective and subjective elements of a particular crime are fulfilled). In other words, an enterprise cannot be convicted based only on the fulfilment of the objective elements of the offence (ie, in case of money laundering, the frustration of the identification of origin, tracing or forfeiture of assets which originate from a felony or aggravated tax misdemeanour). In addition, it is mandatory to establish that one or several (possibly unknown or unidentified) employees acted with the required intent and fulfilled the subjective elements of the offence (ie, in case of money laundering, that they knew or had reason to believe that the assets originated from a felony or aggravated tax misdemeanour). The Supreme Court expressly rejected the notion that proof of the subjective elements was unnecessary and that it would suffice if the objective and subjective elements of the offence could be attributed only to the enterprise itself.
An individual was paid Sfr4.6 million in cash at a counter of a financial intermediary. This cash payment fulfilled the objective elements of money laundering because the assets originated from a felony and the withdrawal in cash not only interrupted the paper trail, but also frustrated the confiscation. However, the prosecutor took the view that the employees involved in the transaction did not fulfil the subjective elements of money laundering. Therefore, the prosecutor did not start an investigation against the compliance officer who had authorised the payment, and terminated the investigation against the main teller without filing charges. Instead, the prosecutor filed charges against the financial intermediary on the basis of criminal liability as an enterprise for money laundering (Article 102(2) in connection with Article 305bis). The first-instance court found the financial intermediary guilty, but the second-instance court acquitted the enterprise. In its recent decision, the Supreme Court upheld this acquittal.
According to the Supreme Court's reasoning, both alternatives of an enterprise's criminal liability require that a criminal offence has been committed in the exercise of commercial activities in accordance with the objects of the enterprise. The committing of this underlying offence is an objective prerequisite for the enterprise's criminal liability. Therefore, it is mandatory to establish that the objective and subjective elements of the offence are fulfilled. If this cannot be proven, the enterprise must not be held liable under criminal law. Otherwise it would result in a strict liability, which the legislature expressly wished to avoid.
The genuine or cumulative criminal liability of enterprises for specific white collar crimes according to Article 102(2) arises "independently of the criminal liability of natural persons". This means that (unlike for the second-degree criminal liability according to Article 102(1)) the enterprise may also be held liable if the natural person who committed the underlying offence can be identified and proven to be the offender. In turn, it is unnecessary to detect or punish the actual offender in order to hold the enterprise liable. However, what is required is that a (possibly unknown or unidentified) natural person acted in a manner which fulfils the objective and subjective elements of the offence.
In addition, the genuine or cumulative criminal liability of an enterprise requires a connection between the underlying offence and the enterprise's organisational shortcomings. The mere fact that one of the white collar crimes listed in Article 102(2) has been committed is insufficient proof that the enterprise has violated its duty to prevent such an offence from being committed. It must be established that specific organisational measures had been necessary and were not put in place.
The court found that the underlying offence (ie, money laundering) was not established. It stated that the subjective elements of money laundering were not fulfilled by the employees involved in the transaction, and that these subjective elements could not be attributed to a "generic natural person". Under these circumstances, the mere charge of an organisational shortcoming is insufficient to hold the enterprise criminally liable according to Article 102(2).
The decision clarifies that the genuine or cumulative criminal liability of enterprises according to Article 102(2) is not a strict liability for organisational deficiencies. An enterprise cannot be held criminally liable only because one of the white collar crimes listed in this provision has been committed in the exercise of commercial activities. In particular, it is not sufficient if the objective elements of the offence are fulfilled and if the information that was necessary to fulfil the subjective elements of the offence had been available within the enterprise. Rather, it is absolutely necessary that one or several (possibly unknown or unidentified) employees actually had this knowledge and that it is established that the subjective elements of the offence were fulfilled.
The decision is of considerable relevance for financial intermediaries if they face money-laundering charges as an enterprise. The objective elements of money laundering (ie, the frustration of the identification of the origin, tracing or forfeiture of assets which originate from a felony or aggravated tax misdemeanour) may well be fulfilled in cases in which no employee fulfilled the subjective elements (ie, no employee knew or had reason to believe that the assets in question originated from a felony or aggravated tax misdemeanour). By clarifying that it is not sufficient if based on the information available within the enterprise such knowledge may be assumed, the court rejected a broad notion of criminal liability as an enterprise for money laundering.
For more information please contact Daniel Tunik or Miguel Oural at Lenz & Staehelin's Geneva office by telephone (+41 58 450 70 00) or email (email@example.com or firstname.lastname@example.org). Alternatively, contact Harold Frey or Dominique Müller at Lenz & Staehelin's Zurich office by telephone (+41 58 450 80 00) or email (email@example.com or firstname.lastname@example.org). The Lenz & Staehelin website can be accessed at www.lenzstaehelin.com.
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