Mexico’s Financial Sector Confronts Money Laundering Threats
Mexico’s financial sector is facing significant money laundering (ML) threats due to its high volume of transactions and strong connections to the international financial system. According to a recent assessment, brokerage firms and DNFBPs such as notaries and real estate agents are particularly vulnerable to ML threats.
Typical Money Laundering Methods
- The use of shell and front companies to conceal beneficial ownership
- The purchase and sale of high-value goods
- Cash smuggling across the U.S.-Mexico border
The widespread use of cash and Mexico’s large informal economy also increase the risk of illicit proceeds being re-channeled into the formal economy.
Efforts to Combat Money Laundering
Despite these challenges, Mexico has made significant progress in combating ML since its last assessment in 2008. The country has a strong legal and institutional framework for combating ML and proliferation financing (PF). However, there are still areas where improvement is needed, such as:
- Investigation and prosecution of ML cases
- Confiscation
National Risk Assessment
Mexico’s national risk assessment (NRA) was concluded in June 2016 with the involvement of all competent authorities and the private sector. The NRA provides a reasonable basis for updating the country’s AML/CTF strategy and developing the next risk assessment.
However, the analysis and understanding of risks appears to rely more on FIU information than law enforcement information.
Coordination and Policy Setting
Mexico has developed a national strategy based on the NRA findings, with two high-level groups of officials created in November 2016 to develop AML/CTF policy and actions. While there is generally good coordination on ML issues between:
- FIU
- PGR
- Supervisors
Less so between LEAs and PGR. The lack of inter-agency cooperation impedes Mexico’s ability to effectively tackle ML cases.
Financial Intelligence
Competent authorities at all levels regularly receive and access a wide range of financial intelligence provided or maintained by the FIU. However, financial intelligence is not regularly used to support ML/TF investigations and trace assets. The FIU produces good operational and high-quality strategic analyses that serve the PGR in launching ML and associated predicate crimes investigations.
Challenges Remain
Despite these efforts, challenges remain in Mexico’s fight against money laundering. These include:
- Lack of reporting by DNFBPs
- Delays in FIU disseminations
- Deficiencies related to the cash couriers’ regime
- Lack of BO information at the federal and state levels
Conclusion
Mexico’s financial sector faces significant money laundering threats, but the country has made progress in combating these threats. However, challenges remain, including:
- Need for improved coordination between authorities
- Use of financial intelligence to support ML/TF investigations
Addressing these challenges will require continued efforts by Mexican authorities to strengthen their AML/CTF framework and improve cooperation between agencies.