Financial Crime World

Mexico Faces Scrutiny Over Counter-Financing of Terrorism Guidelines

Mexico’s efforts to combat the financing of terrorism have been assessed by international authorities, with the country receiving mixed reviews in a recent report.

Progress and Challenges

According to the Follow-Up Report 2023, Mexico has made significant strides in:

  • Assessing risk and applying a risk-based approach to combat money laundering and terrorist financing (R.1)
  • Demonstrating effective national cooperation and coordination (R.2)
  • Having strong laws in place to criminalize money laundering and terrorist financing offenses (R.3 and R.5)

However, Mexico still faces challenges in:

  • Improving financial institution secrecy laws (R.9)
  • Reducing reliance on third parties (R.17) and increasing transparency and beneficial ownership of legal persons and arrangements (R.24 and R.25)
  • Regulating and supervising designated non-financial businesses and professions (DNFBPs) (R.28)
  • Implementing effective financial intelligence units (R.29)
  • Improving powers and responsibilities of law enforcement and investigative authorities in combating terrorist financing (R.30 and R.31)

Compliance with FATF Recommendations

The report notes that Mexico is largely compliant in areas such as:

  • Customer due diligence (R.10)
  • Record keeping (R.11)
  • Internal controls (R.18)
  • Regulating and supervising financial institutions (R.26)
  • Commitment to transparency and beneficial ownership (R.24)

Conclusion

The Follow-Up Report 2023 serves as a wake-up call for Mexico, highlighting the need for continued improvement in key areas to effectively combat the financing of terrorism. As the country works to address these challenges, it is crucial that international cooperation and collaboration continue to play a vital role in this effort.

Recommendations

To improve its counter-financing of terrorism efforts, Mexico should:

  • Strengthen financial institution secrecy laws
  • Reduce reliance on third parties and increase transparency and beneficial ownership of legal persons and arrangements
  • Regulate and supervise designated non-financial businesses and professions (DNFBPs)
  • Implement effective financial intelligence units
  • Improve powers and responsibilities of law enforcement and investigative authorities in combating terrorist financing

By addressing these challenges, Mexico can continue to make progress in implementing the FATF Recommendations and effectively combat the financing of terrorism.