Financial Crimes and Terrorism Financing in Mexico: A Growing Concern

Mexico has faced mounting concerns over its ability to combat financial crimes and terrorism financing, with a recent report highlighting several areas of improvement.

Key Issues Identified

• Ineffective Risk Assessment: Mexico’s lack of effective risk assessment and application of a risk-based approach in its financial system has led to concerns that certain sectors or individuals may be more vulnerable to illicit activities.
• National Cooperation and Coordination: There are concerns over national cooperation and coordination among law enforcement agencies, with some areas deemed “partially compliant”.
• Weak Laws: Mexico’s laws regarding money laundering and terrorist financing offenses have been criticized as weak.

Areas Requiring Improvement

• Financial Sanctions: Mexico’s efforts to target financial sanctions related to terrorism and terrorist financing have been deemed “compliant”, but there are concerns over the effectiveness of these measures in practice.
• Non-Profit Organizations: Non-profit organizations, customer due diligence, record keeping, and other key areas require improvement.
• Regulation and Supervision: The country’s regulation and supervision of financial institutions, DNFBPs, and law enforcement authorities all require improvement.

Specific Concerns

• Tipping-Off and Confidentiality Laws: Tipping-off and confidentiality laws have been criticized for being too lenient.
• Transparency and Beneficial Ownership: Transparency and beneficial ownership of legal persons and arrangements remain a concern.
• Extradition Agreements: Extradition agreements also need to be strengthened.

Conclusion

Mexico faces significant challenges in combating financial crimes and terrorism financing. While some areas have been deemed “compliant” or “largely compliant”, there is still much work to be done to ensure the country’s financial system is robust and secure against these threats.