I. INTRODUCTION

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The long-standing debate over whether legal entities could or could not commit crimes has now been left behind. Today, international practice and legislative evolution confirm that corporations can be held criminally liable. It is not that it has been demonstrated that incorporeal entities created by law have the ability to act criminally (as a natural person would); rather, it is reaffirmed that those who act criminally are the natural persons who direct, represent, manage, or use such entities for illicit purposes.

 

Corporate criminal liability operates differently — it is triggered when crimes committed by executives, representatives, or subordinates are carried out for the benefit of, in the name of, or on behalf of the entity. In such cases, when internal control and organizational mechanisms have failed, the company itself is held directly responsible for the acts committed.

 

Indeed, the most recent reform to the Nicaraguan Penal Code (Law No. 1216 of September 6, 2024) reinforces this international trend. A legal entity may be held liable either jointly with the natural persons involved or independently, when such individuals cannot be prosecuted because they have evaded justice, passed away, or become criminally non-imputable. Thus, an autonomous criminal liability is established.

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II. CRIMINOGENIC RISKS IN THE CORPORATE ENVIRONMENT

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Although the vast majority of corporations operate lawfully, it is not uncommon —particularly in connection with organized and transnational crime— to find entities created or used instrumentally to facilitate criminal conduct.

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However, within an organization established and structured for lawful purposes, the risk of criminal behavior increases when the company sets unrealistic growth targets, prioritizes short-term profits, or incentivizes personnel through bonus or stock programs tied directly to financial performance. As noted by the OECD, such practices often act as criminogenic factors, fostering crimes such as bribery, fraud, and influence peddling.

 

The real challenge for companies is no longer merely to detect illicit conduct, but to identify and address the structural roots within the corporate culture that enable such conduct to occur.

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III. MODELS OF CORPORATE LIABILITY: THE COMPLIANCE SHIELD

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To confront this type of corporate criminality, two distinct models have been developed. On one hand, the Anglo-American model of vicarious liability (or liability by transfer), under which a corporation may be declared “criminally guilty” for offenses committed in its interest by its executives, employees, or agents. This model relies on the “theory of representation,” where—depending on the case—the focus is on holding the represented organization accountable, regardless of whether the individual representative is punished.

On the other hand, the autonomous liability model holds that the corporation’s responsibility is independent from that of the individual offender. In this model, the company is held liable for having breached the implicit legal mandate to properly manage its own risk of criminal activity.

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Nicaraguan legislation adopts this second model of autonomous or self-liability, aligning with certain Latin American and continental European jurisdictions. Article 45 bis of the Penal Code establishes three requirements for criminal liability of a legal entity:

1. The commission of a crime by legal representatives, de facto or de jure administrators, or by subordinates directly reporting to them.

2. That the act be committed in the course of the company’s activities, in its name, on its behalf, or for its benefit.

3. Proof that the act was possible because the company failed to exercise due control or supervision, meaning it lacked clear, direct, and effective mechanisms for managing criminal risks — in other words, it did not have an operational compliance program functioning as a corporate shield.

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IV. CORPORATE CRIMES AND SEVERITY OF PENALTIES

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Regarding the offenses that can give rise to corporate criminal liability, Nicaragua follows a numerus clausus system. Not all crimes in the Penal Code apply, but there are easily over one hundred, ranging from fraud and money laundering to tax, banking, and financial crimes, as well as offenses against public administration and the environment.

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As for the penalties applicable to legal entities —a topic I will address more critically elsewhere— they include some of the harshest sanctions: multi-million-dollar fines, confiscation of assets, state intervention, suspension of activities, and even dissolution of the company—a sort of legal “death penalty” for this juridical fiction.

 

It is clear that the establishment of corporate criminal liability in Nicaragua represents not only a paradigm shift in business criminal law but also places the entire business community before a new challenge:
How can a company properly manage its criminal risks?

 

Would you like me to format this translation for publication —for example, adapting it to a bilingual article or conference paper layout (Spanish–English side by side, or with academic footnotes)?

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Dr. Manuel Aráuz Ulloa