Money laundering is considered to be the crime of operations with money from illegal means under article 400 of the Federal Criminal Code. The money laundering offense is also complemented by the Federal Law Against Organized Crime, which provides higher criminal sanctions for money laundering offenders considered to be members of a criminal organization. The Federal Criminal Procedures Code considers money laundering offense to be a serious, and they limit a charged defendant the ability to obtain release on bail prior to conviction.
Mexico’s Regulatory Authority
With regard to anti-money laundering laws and regulations, the Ministry of Finance is the overall regulatory authority. The Ministry of Finance is authorized to regulate and supervise the financial system, and to issue anti-money laundering regulations that establish measures and procedures to prevent and detect money laundering activities.
Businesses Must Operate Under Anti-Laundering Activities
The Law for the Prevention and Identification of Transactions with Criminal Proceeds will also bind certain businesses and activities to operate under certain anti-laundering activities:
- real estate development;
- activities related to the practice of gambling, contests or raffles carried out through the sale of tickets, tokens or any other type of proof of payment;
- activities related to the issuance and marketing of prepaid cards, payment service cards and any type of card comprising instruments for the crediting of money value;
- activities related to the issuance and marketing of traveler’s cheques;
- the granting of credit or guarantees;
- construction services, real estate development services, real estate brokerage or intermediation services;
- marketing of precious metals, precious stones, jewels or watches;
- marketing and auctioning of artwork;
- marketing and distribution of new or used vehicles;
- vehicle and real estate escrow services;
- money and value transportation services;
- certain representation activities carried out by lawyers and other independent service suppliers;
- certain notarial, attestation and appraisal activities carried out by notaries public, brokers and public officers;
- the receiving of donations by non-profit organizations;
- certain customs brokerage activities; and
- the lease and granting of personal rights of use over real estate assets.
Mexico’s AML regulations require covered institutions to document and send to the corresponding regulatory authority evidence in which the institutions develop their customer identification and KYC policies, as well as all criteria, measures and internal proceedings that the institutions must adopt in order to comply with the AML regulations, including the selection proceedings of their employees and AML training requirements.
Mexico is not listed as a non-cooperative country by the FATF, nor as an uncooperative tax haven by the OECD. It is on the EU’s white list of equivalent jurisdictions and is not included in the original IMF list.
Inclusion of Virtual Assets
(May 22, 2018) Mexico’s Federal Law for the Prevention and Identification of Transactions with Resources of Illicit Origin (commonly referred to as the Anti-Money Laundering Law) was amended in March 2018 in order to regulate transactions with “virtual assets”—that is, cryptocurrencies.
This law defines virtual assets as representations of value electronically registered and utilized by the public as a means of payment for all types of legal transactions, which may be transferred only electronically. It also provides that Mexico’s legal currency may not, under any circumstances, be considered a virtual asset.
Providing services involving virtual assets is an activity classified by this Law as vulnerable to money laundering. Thus, providers of such services must report to the Mexican government relevant transactions that reach or exceed a particular amount (equivalent to approximately US$2,638 as of May 2018) starting in September 2019.
Providers using crypto-currencies will have a number of additional duties, including:
- identifying their clients and verifying their identity through official identification documents, a copy of which must be kept by the provider;
- asking the client for information on his or her occupation if a business relationship is established; and
- keeping records pertaining to transactions and clients.
Corruption is the abuse of entrusted power for private gain. It can be classified as grand, petty and political, depending on the amounts of money lost and the sector where it occurs.
I RECOMMEND EVERY BUYER AND SELLER DO THEIR DUE DILIGENCE.
This article is based upon Flex MLS reporting, legal opinions, current practices and my personal experiences in the Puerto Vallarta-Bahia de Banderas areas. I recommend that each potential buyer or seller of Mexican real estate conduct his own due diligence and review. If you have any other questions, contact me through my website.Harriet Murray