Mexico’s Money Laundering Prevention Act Under Scrutiny: 2023 Follow-Up Report Raises Concerns

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Mexico’s efforts to prevent money laundering have been assessed by international financial authorities, with a mixed report card. The latest follow-up report highlights both progress and areas for improvement in the country’s implementation of the Financial Action Task Force (FATF) Recommendations.

Strengths and Weaknesses

The report identifies several strengths in Mexico’s approach to preventing money laundering, including:

• Effective assessment of risk and application of a risk-based approach
• Confiscation and freezing of assets related to money laundering
• Strengthening of national cooperation and coordination mechanisms

However, the report also highlights several areas where Mexico needs to improve, including:

Key Concerns

Laws on Financial Institution Secrecy

Mexico’s laws on financial institution secrecy are seen as overly broad and provide insufficient protections against money laundering.

Transparency and Beneficial Ownership

Concerns have been raised about the lack of transparency and beneficial ownership of legal persons and arrangements.

Customer Due Diligence and Record-Keeping

Mexico has inadequate customer due diligence and record-keeping practices, which increases the risk of money laundering.

Correspondent Banking Relationships

The country has failed to implement effective measures to prevent the use of correspondent banking relationships for money laundering purposes.

Progress in Other Areas

While Mexico has made some progress in implementing targeted financial sanctions related to terrorism and terrorist financing, more needs to be done to prevent the misuse of wire transfers and other payment systems.

Recommendations for Improvement

The report concludes that while Mexico has made progress, more needs to be done to ensure its financial system is robust and effective in preventing money laundering and terrorist financing. To address these concerns, Mexico should:

• Strengthen laws on financial institution secrecy and transparency
• Improve customer due diligence and record-keeping practices
• Implement effective measures to prevent the use of correspondent banking relationships for money laundering purposes
• Enhance internal controls and foreign branches and subsidiaries
• Implement adequate measures to prevent the use of new technologies for money laundering purposes

Conclusion

Mexico’s 2023 follow-up report has raised concerns about the country’s progress in preventing money laundering. While some areas have seen improvement, others require significant attention to ensure a robust and effective financial system.