top of page

Nearshoring, Corruption and Compliance

By: Ivan Szymanski

In recent years, the spotlight has been cast on the burgeoning "nearshoring trend" in Mexico, a narrative explored in numerous articles, columns, TV shows, and newspapers. These discussions have dissected the myriad benefits and challenges facing companies contemplating the relocation of their operations to Mexico.

Among the primary hurdles frequently discussed are:

  • The scarcity of industrial spaces compared to the growing demand from companies eyeing a move to Mexico.

  • Mexico's struggle to establish a reliable power system capable of ensuring uninterrupted operations for major electricity consumers.

  • Escalating concerns about the safety of transporting goods by land or railway.

  • A shortage of drivers and trailers for efficient goods transportation within Mexico.

  • The bureaucratic complexities in obtaining permits and authorizations.

However, an often overlooked and critical factor tying into these challenges is Mexico's "body in the closet" - corruption. Transparency International's Corruption Perception Index ranks Mexico at 126 out of 180 countries, the lowest within the OECD. Despite the anti-corruption rhetoric from AMLO's government, corruption remains deeply ingrained in Mexico's business culture.

Forbes identifies industries such as construction, pharmaceuticals, mining, retail, and non-environmentally friendly enterprises as particularly vulnerable to the impact of corruption.

While these challenges might give investors pause, the undeniable proximity to the world's largest consumer market makes Mexico an investment destination worthy of consideration. The key for nearshoring companies lies in devising strategies to mitigate the risks associated with corruption while conducting business in Mexico.

It is imperative for corporations launching operations in Mexico to establish robust and efficient compliance systems for their subsidiaries. While there is currently no legal mandate for an internal anti-corruption and bribery policy in Mexico (unlike anti-money laundering regulations), the advantages of having and implementing such policies are significant.

For instance, an effective "integrity system" can serve as a mitigating factor in case of a corruption allegation or it may aid in preventing and detecting corrupt practices. Mexican laws also offer leniency programs for those who disclose acts of corruption, subject to certain conditions.

To harness these benefits, it is crucial that the "integrity system" and "anti-corruption policy" adhere to specific parameters outlined by the relevant authorities at federal, state, or local levels. Given the nuanced regulatory landscape, we strongly recommend engaging the expertise of a local compliance specialist when establishing compliance programs for Mexican subsidiaries. Generic translations of global anti-corruption policies may fall short of meeting all the requirements mandated by Mexican laws, potentially jeopardizing the eligibility for any legal benefits.

By: Ivan Szymanski


bottom of page