Development Bank Sanctions in Latin America

Rhys Davies, co-founder of IHR Advisors and a barrister at Temple Garden Chambers, has published a study of multilateral development bank sanctions with Cristian González Ruiz of the firm’s The Hague office. The article, carried by the International Bar Association on 8 June 2026, sets the debarment regimes of institutions such as the Inter-American Development Bank against the criminal codes of Latin America. It asks a question few practitioners have confronted: what happens when the two run on parallel tracks?

What multilateral development bank sanctions do

Multilateral development bank sanctions are administrative debarments that bar companies and individuals from bank-financed contracts when an institution finds they engaged in corrupt, fraudulent, coercive, collusive or obstructive practice. The Inter-American Development Bank runs one of the busiest regimes in the Americas, and it does not act alone. Under the 2010 Agreement for Mutual Enforcement of Debarment Decisions, a sanction imposed by the IDB, the World Bank, the African Development Bank, the Asian Development Bank or the European Bank for Reconstruction and Development is recognised by the others. One finding can shut a firm out across five institutions at once.

The numbers show the reach. More than 500 entities had been cross-debarred by 2017, and the figure has kept climbing. The World Bank alone made 26 referrals in its 2025 fiscal year. Debarment periods typically run between three and thirteen years, against a ten-year limitation period. In decisions SNC63 and SNC64 two Ecuadorian firms drew debarments of 132 months. Decision SNC71 reached an individual in Haiti’s transport sector. These are not paper penalties.

Where the bank regime and the criminal law diverge

The problem the authors identify is one of fit. The IDB defines a corrupt practice as offering, giving, receiving or soliciting anything of value to improperly influence another party. There is no requirement that a public official be involved, and no need to prove a specific quid pro quo. Latin American criminal codes are drawn far more tightly. Colombia’s Articles 405 to 407, for instance, require a public official and a connection to official functions. Conduct that would never sustain a domestic prosecution can still trigger a debarment lasting a decade.

The gap widens on evidence. A sanctions committee decides on the preponderance of the evidence, meaning no more than that a finding is more likely than not. Latin American criminal courts demand proof beyond reasonable doubt. The committee works without formal rules of evidence, with broad discretion over the weight of material, no guaranteed live cross-examination, and no meaningful judicial review. The consequences, though, look criminal in all but name. A debarred party is named on a public register, must disclose the sanction in tender documents, and is often referred on to national prosecutors.

Thr central point is that these two systems now operate in parallel, and that almost nobody has mapped where they meet. A debarment frequently arrives before any criminal investigation rather than after it, which inverts the sequence lawyers expect. The authors call for careful doctrinal work setting the definitions used by the development banks against the penal codes of the region, so that overlaps and gaps are understood in advance rather than discovered mid-proceeding. This is work for criminal and international lawyers, not compliance teams alone. A development bank can end a business before a prosecutor ever opens a file.

How IHR Advisors can help

We advise companies and individuals caught in sanctions and debarment proceedings and in the cross-border criminal exposure that can follow. Rhys Davies and Cristian González Ruiz practise in international criminal law, business and human rights, and corporate accountability, and the firm’s Latin America work sits directly on the fault line this article describes. We help clients respond to an Office of Institutional Integrity investigation, challenge a proposed debarment, and manage the parallel risk of national prosecution and cross-debarment across the wider development bank system.

With thanks to the International Bar Association, which published the original article on 8 June 2026. You can read it in full here.

If you face a debarment proceeding or a cross-debarment risk, contact us in confidence.