Financial Crime World

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Mexico’s Rating Upgraded for AML/CFT Compliance Frameworks for Small Banks

Mexico has made significant progress in strengthening its anti-money laundering (AML) and combating the financing of terrorism (CFT) frameworks, earning it a notable upgrade in its latest rating by the Financial Action Task Force (FATF).

FATF Report Highlights Mexico’s Progress

According to the FATF Follow-Up Report 2022, Mexico has implemented several key measures to strengthen its AML/CFT frameworks. These include:

  • Improving risk assessment and applying a risk-based approach (R.1)
  • Enhancing national cooperation and coordination mechanisms (R.2)
  • Strengthening laws related to money laundering offenses (R.3) and terrorist financing offenses (R.5)

Mexico has also implemented measures to prevent the misuse of financial institutions secrecy laws (R.9), improve customer due diligence requirements (R.10), and enhance record-keeping requirements (R.11). Additionally, the country has made progress in implementing Politically Exposed Persons (PEPs) regulations (R.12).

Areas for Improvement

While Mexico’s progress is notable, there are still some areas where improvement is needed:

  • Reliance on third parties (R.17)
  • Reporting of suspicious transactions (R.20)
  • Customer due diligence and other measures for Designated Non-Financial Businesses and Professions (DNFBPs) (R.22 and R.23)

Positive Impact on Mexico’s Financial Sector

Mexico’s upgraded rating is expected to have a positive impact on the country’s financial sector, particularly for small banks that operate in the country. The enhanced reputation will make it easier for these institutions to conduct international transactions and maintain correspondent banking relationships with foreign institutions.

Next Steps

To further solidify its position as a trusted financial hub in the region, Mexico’s authorities should continue to prioritize AML/CFT compliance and work towards addressing the remaining areas of concern identified by the FATF. By doing so, Mexico can ensure that its financial sector remains robust and secure.