Mexico’s Struggle to Combat Money Laundering: A Systemic Failure?

Mexico has made significant strides in establishing an anti-money laundering and counter-terrorist financing (AML/CFT) system, but its efforts have been marred by a lack of effective pursuit of launderers and confiscation of their assets. According to the International Monetary Fund’s (IMF) recent assessment, Mexico’s AML/CFT regime is mature and well-developed, with a robust legal framework and institutional structure. However, this system has failed to mitigate the significant risks posed by money laundering and terrorist financing.

The Root of the Problem

The root of the problem lies in the country’s failure to investigate and prosecute money laundering on a proactive basis. Instead, authorities have been reactive, focusing on individual cases rather than tackling the issue systematically. Furthermore, there is a lack of confiscation of proceeds and instrumentalities, which is commensurate with the risks posed by money laundering.

Insufficient Oversight

The financial sector has implemented reasonable risk-based approaches to AML/CFT supervision, but oversight of designated non-financial businesses and professions is woefully under-resourced and inadequate. As a result:

• Suspicious transaction reporting remains low across all sectors.
• Regulatory sanctions are not being imposed in an effective, proportionate, and dissuasive manner.

Lack of Beneficial Owner Identification

Another significant concern is that beneficial owners are not being identified to the extent necessary, which hinders entities’ ability to assess and manage money laundering and terrorist financing risks effectively.

Conclusion

While Mexico has made progress in establishing an AML/CFT system, its failure to pursue launderers and confiscate their assets remains a major concern. The country must take concrete steps to address these issues if it is to mitigate the significant risks posed by money laundering and terrorist financing.