Financial Crime World

Mexico Needs to Step Up Efforts in Fighting Terrorist Financing and Money Laundering

Adequate Anti-Money Laundering and Counter-Terrorist Financing System, But More Needs to be Done

The International Monetary Fund (IMF) has deemed Mexico’s anti-money laundering and counter-terrorist financing (AML/CFT) system as adequate. However, critics argue that despite this assessment, the country still faces significant risks of money laundering due to activities linked to organized crime.

High Risk of Money Laundering

  • Primary causes: drug trafficking, extortion, corruption, and tax evasion
  • Well-developed legal and institutional framework in place
  • Good preventive measures and international cooperation channels
  • Most authorities have a good understanding of the risks associated with money laundering and terrorist financing
  • Good policy coordination

Areas for Improvement

Financial Intelligence Unit

  • Financial intelligence produced does not often lead to investigations into money laundering, underlying crimes, or terrorist financing
  • Underlying crimes are not always investigated, which hinders efforts to combat money laundering and terrorist financing

Supervision of Non-Financial Businesses and Professions

  • Oversight is under-resourced and lacking
  • Risk-based approaches to AML/CFT supervision have been implemented, but more needs to be done

Regulatory Sanctions

  • Authorities fail to apply regulatory sanctions in an effective, proportionate, and dissuasive manner across all sectors
  • Investigations are often conducted on a reactive, case-by-case basis rather than being proactive and systematic

Confiscation of Proceeds and Instrumentalities

  • Failure to systematically pursue confiscation of proceeds and instrumentalities as a policy objective is a major concern
  • This hinders efforts to combat money laundering and terrorist financing

Beneficial Ownership

  • Beneficial owners are only being identified to a limited extent, which hinders entities’ ability to assess and manage money laundering and terrorist financing risks effectively

Conclusion

Despite some high-profile investigations in recent years, more needs to be done by Mexican authorities to tackle the significant risks posed by money laundering and terrorist financing. The country must take additional steps to strengthen its AML/CFT system and combat these threats effectively.