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Mexico’s Struggle Against Financial Crimes Plagued by Corruption and Inefficiency
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Mexico City, Mexico - Despite efforts to combat financial crimes, Mexico continues to struggle with corruption and inefficiencies that hinder its ability to effectively tackle money laundering and terrorism financing.
The Problem
According to Global Financial Integrity, criminal proceeds in Mexico amount to a staggering $25 billion to $62 billion annually, with money laundering flowing from these activities estimated at $18 billion to $44 billion. The country’s anti-money laundering and anti-terrorism financing system is plagued by poor communication and coordination between government bodies, as well as limited understanding of trade-based money laundering.
Challenges
- Poor communication and coordination between government bodies
- Limited understanding of trade-based money laundering
- Lack of transparency in the beneficial ownership of companies and individuals
Reforms
Reforms are underway to strengthen Mexico’s enforcement options, including the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin and the National Law for Asset Forfeiture.
A Different Approach
Mexico’s approach to measuring success in combating financial crimes differs from that of its northern neighbor, the United States.
Corruption Widespread Across Latin America
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The struggle against financial crimes is not unique to Mexico. Countries across Latin America are grappling with corruption and inefficiencies that hinder their ability to effectively combat money laundering and terrorism financing.
Guatemala’s Challenges
Guatemala, a country considered the largest economy in Central America, has a flawed and unevenly applied legal system, where ordinary citizens are often persecuted instead of those with outsize financial or political standing. The country’s anti-corruption campaigners have fled to the United States due to threats and intimidation.
Honduras’ Corruption
Honduras, another Central American country, has been plagued by high-level government corruption and power imposed by drug trafficking organizations. The country’s president, Juan Orlando Hernández, has himself been named in criminal cases involving state-sponsored drug trafficking.
Nicaragua’s Authoritarian Regime Undermines Anti-Corruption Efforts
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In Nicaragua, authoritarian President Daniel Ortega has impeded progress on financial corruption controls, using money laundering charges to silence political opponents and surveil the finances of dissidents. The country’s business ownership registry is seen as a tool for monitoring the financial activities of human rights activists rather than uncovering illicit activities.
What Can Companies Do?
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As businesses with exposure to Latin America, it is essential to take proactive steps to avoid entanglement in corruption and malfeasance. This includes:
- Conducting thorough due diligence on business partners
- Examining third-party vendors
- Implementing ongoing supply chain audits focused on ethical integrity
- Staying up to date on legislative developments and ensuring compliance with anti-corruption laws
IntegrityRisk International, a leading expert in risk management and compliance, offers guidance and support to companies operating in the region.
Contact Us
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To learn more about how IntegrityRisk can help your organization navigate the complex landscape of financial crimes and corruption in Latin America, contact us today.