As discussed in part one, a new regulatory environment is bound to change the rules of doing business in Latin America and companies should be ready to face new intrinsic challenges. However, there’s no need to panic – this new environment is also certain to result in significant openings for companies that recognize enforcement as an opportunity.

Recognizing windows of opportunity is an art in the world of business. For many international companies, compliance with anti-corruption laws has become a competitive advantage in Latin America causing preconceptions about the region to evolve. Companies from countries with the toughest laws and the highest levels of international enforcement are showing a greater willingness to take the first step regarding investing in Latin America, but many others will follow. However, the gap between the perceived protection that a compliance program brings and its actual mitigating effect is the biggest point of weakness for those operating in some of these mid- to high-risk markets. Let’s explore some of the significant opportunities available for companies who understand the real risks and challenges of doing business in Latin America:

  • Out-of-the-box opportunities: The Car Wash investigations have consequently brought “outside the box” opportunities for companies and investors. Brazilian regulators, for example, have increased international cooperation by exchanging information with authorities from Latin American countries and across the globe to trace and recover assets arising from fraud and corruption. As a result there are assets up for sale in Latin America that were controlled by companies investigated in the wake of the recent corruption scandals. The ripple effects of the investigations have led to the discovery of assets in oil and gas, sanitation concessions, renewable energy, infrastructure and agricultural projects. 
  • Mining and infrastructure opportunities: Mining is poised to become an even more significant industry in several countries including Colombia and Peru. There are vast areas with immense mining potential that have been off-limits to large private sector projects and have until very recently become accessible to investors. However, there are underlying risks to such operations that companies must be ready to effectively face them. 

    In terms of infrastructure, Andean region countries are plagued with corruption-riddled megaprojects. Governments are now trying to correct course by, for example, increasing due diligence standards. For instance, Colombia’s ambitious infrastructure plan, dubbed the “Fourth Generation” or the “4G”, is slated to include more than USD 24bn in spending to build 5,000 miles (8,000 km) of new roads and upgrade ports. In Peru, the government is planning to construct a southern gas pipeline and start rebuilding projects in the wake of devastating floods last year; but the list goes on.

    Other emerging business opportunities for investors are also in the spotlight, including cannabis, agroindustry and renewable energies, all of which promise attractive returns. 
  • Better public bidding processes: Recent corruption scandals and regulatory trends have also resulted in less monopolized biding processes in the region. On the back tail of compliance related investigations and the anti-corruption efforts, companies that were previously not considered major contenders for state contracts have won due to competitor’s corrupt practices. Some countries have gone as far as saying that companies found to employ corrupt practices will be banned from contracting with the state. This opens a new path for competition.  
  • It will become easier for companies to know how to behave: As many of the country corruption frameworks continue to be enacted and specific sets of guidelines are approved by governments, companies will finally have a compelling reason to move forward with the implementation of their anti-corruption and compliance programs.  Even though there was a lot of skepticism among companies due to the absence of a clear set of rules that would govern the anti-corruption management systems, that’s about to change. Some of the countries incorporating such guidelines in 2018 include Ecuador, Chile and Peru. 

It will be critical for local and foreign investors and operators to understand and adequately navigate the various regulations and protocols, adopt appropriate security measures, conduct training and enhanced due diligence on investors and third parties, accurately assess risks and threats, consider social unrest, and create comprehensive stakeholder maps that reflect the reality and context in which businesses will operate. Questions such as “who am I associated with?” and “how do protect myself from these risks?” will be paramount. Although resources are limited, this new environment presents a unique opportunity for companies of all sizes to demonstrate to both business partners and regulatory bodies that they are moving in the right direction while embracing new opportunities. 

Where to start

Our experience in the region has led us to conclude that embracing compliance and anti-corruption starts with overall awareness of the issue and then shifts to individually understanding each one of its elements. Quite often in Latin America, when companies are told they need to do everything, they end up doing nothing. Thus, the adoption of an intelligent integrity model needs to include day-to-day practices of process improvement, risk management and compliance. Although there are multiple fundamental elements to be considered when mitigating corruption risks, at this point in time, we want to highlight two of them:  


Latin American citizens have grown accustomed to dysfunctional judicial systems, which fail to punish violators of the law and continuously seem to favor strongmen and the elite. In this sense, corruption has long been to a certain extent tolerable as part of the region’s reality. Consequently, one of the first steps required to trigger significant change is to provide effective training to employees. It’s a matter of shifting the employee thinking from a ‘what happened’ to a ´what if´ mentality. 

The training, ideally scenario-based, should begin with the basics, especially for a population which has grown accustomed to certain practices that were considered acceptable here but are a felony under the FCPA and UK Bribery Act. Explaining the meaning of anti-corruption, the importance it plays in society, in the company and the value each employee can add in combatting corruption are key objectives. However, at the end of the day, training must foster a space for uncomfortable conversations and questions to take place. By thinking about training as an “outside of your comfort zone approach,” companies may discover surprising truths about their practices. 

Third-party due diligence

Lastly, companies should not only prioritize developing strong internal controls, but also keep a close eye on the third parties with which it does business. The majority of the FCPA enforcement actions from 2017 arose from the use of third-party intermediaries. Due diligence on third parties has long been in the compliance ABCs guidebook, but new stronger regulations (both local and international) now apply to many Latin American countries, and tick-the-box due diligence is no longer sufficient in the eyes of authorities, especially in higher-risk jurisdictions. In Colombia, for instance, even though there is a high reliance on third-party diligence software, it is often necessary to go beyond basic software checks and conduct thorough integrity reviews of business partners.

In many cases, companies that operate overseas are currently requesting that their providers and contractors have strong ABC/AML policies implemented within their organizations as a first step to be considered a business partner. This strategy not only shows highly responsible organizations, but also compels weakly regulated corporations (commonly found in Latin America) to step up to the plate. 

Some final thoughts…

Transparency International recently stated that Latin America still needs overarching policies to address the historic and structural causes of corruption throughout the region. They recommended that governments that want to succeed should continue promoting an integral approach that tackles key structural issues, including political funding, public procurement and the strengthening of independent, strong and flexible legal institutions. However, we consider companies also have a key role to play in creating an integrity friendly business environment and lead by example. 

Companies that take measures to keep their corporations on the right side of anti-corruption laws, understand the meaning of compliance and effectively take advantage of it are those that will have confidence taking on business opportunities in the mid- to high-risk markets of Latin America. Evidence has shown that compliance-focused companies become more competitive in a globalized world where demands for reputable business partners in complex environments are constantly increasing. Yes, compliance can save a company from fines and reputational damage, but more importantly, it can better position companies to capitalize on golden business opportunities. 

Additionally, the idea of compliance being “a thorn in the side” of businesses is quickly fading away. Managers and C-Suite level executives have come to recognize that ethics is not only a risk management driver, but also an enabler of employee engagement, reduced regulatory costs, government trust, reputational recognition and lure of talent. The dominance of the win-win orthodoxy is a sign of progress, and companies are increasingly prioritizing the long-term benefits of compliance. That’s why ethical companies outperform financially over time.  However, if you are trying to build a business case to invest in Latin America and competitiveness-only does not convince your executives, then leverage the growth in willingness of companies to also take public positions on key issues and engage with society in a more impactful way. Questions of corporate values and purpose are front and center in the minds of senior leadership teams, and this trend is only set to accelerate in Latin America. It’s all about maximizing business and ethics.

Compliance today has a critical role in building a sustainable future and ensuring companies long-term survival. For companies willing to put in the work and do the homework, Latin America is the next big destination for investment.


  • Alejandro Hristodulopulos, Senior Consultant
  • Pablo Amaya, Consultant

Monthly Briefing

Receive our analysis and insights straight to your inbox every month

Two-part series: Part 1

You may also be interested in

Get in touch

Can our experts help you?