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Mexico’s Anti-Money Laundering Regime: A Step Closer to Transparency

Mexico City - In a bid to strengthen its anti-money laundering (AML) regime, the Mexican government has implemented several measures aimed at increasing transparency and reducing the risk of illicit activities.

Strengthening Correspondent Transactions

One of the key changes is the requirement for financial institutions to carry out correspondent transactions only with institutions that have a physical presence in any jurisdiction. This move aims to prevent the facilitation of illegal activities by ensuring that financial transactions are traceable and transparent.

Reporting Suspicious Activity

In terms of reporting suspicious activity, there is no objective criteria, except for indications or knowledge of links to unlawful activities. Financial institutions and businesses subject to AML controls must respond promptly to requests from national government authorities.

The government has also established mechanisms for information sharing between financial institutions, as well as between government authorities and financial institutions and businesses subject to AML controls. This includes the exchange of information among different financial entities, including foreign financial institutions, and entities within the same group.

Beneficial Ownership and Control

However, the regime is less stringent in terms of beneficial ownership and control of legal entities, with designated businesses and professions only required to maintain such information for their own benefit and that of governmental authorities.

Payment Transparency Requirements

In a significant development, Mexico has also implemented measures aimed at enhancing payment transparency requirements. For example:

Accurate information about originators and beneficiaries must be included in payment orders for funds transfers.
Specific additional information is required for cross-border transactions.

Additional Measures

Additionally, the country has banned the ownership of legal entities in the form of bearer shares. Non-financial institution businesses, such as currency reporting, are also subject to anti-AML requirements. Customs agents have been deemed a designated profession or business subject to AML controls.

Concerns and Future Developments

Despite these efforts, there are still concerns about the effectiveness of the regime. The country’s anti-money laundering laws and regulations are complex and scattered, with little practical guidance available. Materials for the designated professions and businesses regime can only be found in Spanish. The Mexican government is currently discussing amendments to the AML regime aimed at making it more risk-based and effective.

Evaluation by the Financial Action Task Force

The country’s anti-money laundering regime has been subject to evaluation by the Financial Action Task Force (FATF), with the next review scheduled for this year.

Conclusion

In conclusion, Mexico’s anti-money laundering regime is evolving, with steps being taken to increase transparency and reduce the risk of illicit activities. However, there are still concerns about the effectiveness of the regime, and further changes may be necessary to ensure its success.

Sources:

[Hyperlink] for designated professions and businesses regime materials

Editor’s Note: This chapter has been written by a member of ICLG’s international panel of experts, who has been exclusively appointed for this task as a leading professional in their field by Global Legal Group, ICLG’s publisher. The chapter has been carefully reviewed and edited by an in-house editor.