WHAT ARE THE
Money laundering and terrorism financing laws in Mexico?
In Mexico, money laundering and terrorism financing are serious offences and are governed by the following laws and regulations:
- Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita): Commonly referred to as the Anti-Money Laundering Law, this legislation establishes measures to prevent and detect money laundering activities in Mexico. It outlines obligations for reporting entities, such as financial institutions, designated non-financial services businesses and professions (DNFBPs), and virtual asset service providers (VASPs) to implement AML/CTF programs.
- National Commission for the Prevention of Money Laundering (Comisión Nacional Bancaria y de Valores - CNBV): The CNBV is the regulatory authority responsible for overseeing compliance with anti-money laundering regulations in the financial sector. It conducts inspections, issues guidelines, and imposes sanctions on financial institutions for non-compliance with AML/CFT requirements.
- General Law for the National System of Public Security (Ley General del Sistema Nacional de Seguridad Pública): This law includes provisions related to the prevention and investigation of terrorism financing activities in Mexico. It establishes mechanisms for cooperation among government agencies and international partners to address terrorism-related threats.
- Regulations for the Supervision of Transactions with Virtual Assets (Reglamento de la Ley para Regular las Instituciones de Tecnología Financiera): In response to the emergence of virtual assets and cryptocurrencies, Mexico has implemented regulations to oversee transactions involving virtual assets and VASPs. These regulations aim to mitigate the risks of money laundering and terrorism financing associated with virtual asset transactions.
In addition, there are a number of organisations that support and oversee compliance with these laws:
- Financial Intelligence Unit (Unidad de Inteligencia Financiera - UIF): The UIF is the government agency responsible for receiving, analysing, and disseminating reports on suspicious transactions related to money laundering and terrorism financing. It operates under the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público - SHCP) and works closely with reporting entities and law enforcement agencies to combat financial crimes.
WHAT ARE THE
Key obligations reporting entities have under Mexican laws?
The key obligations under the AML/CTF laws in Mexico include:
- Customer Due Diligence (CDD): Reporting entities are required to conduct customer due diligence procedures to verify the identity of their customers and assess the risk associated with their business relationships. This involves collecting information such as the customer's name, address, identification documents, and the nature of the business relationship.
- Prohibition on Dealing with Certain Individuals or Entities: Reporting entities are prohibited from conducting transactions with individuals or entities that are subject to sanctions or are known to be involved in money laundering or terrorism financing activities.
- Enhanced Customer Due Diligence (ECDD): In cases where there is a higher risk of money laundering or terrorism financing, reporting entities must apply enhanced customer due diligence measures. This may include obtaining additional information about the customer, the source of funds/wealth, and the purpose of the transactions.
- Employee Training: Regular training must be provided to employees, ensuring they are knowledgeable about AML/CFT laws and regulations, including how to identify and report suspicious activities. Ongoing awareness programs should also be in place to keep staff informed of evolving risks and responsibilities related to money laundering and terrorism financing.
- Suspicious Transaction Reporting: Reporting entities are obligated to report suspicious transactions to the Financial Intelligence Unit (Unidad de Inteligencia Financiera - UIF). This includes transactions that are unusual, inconsistent with the customer's known profile or business activities, or otherwise raise suspicion of money laundering or terrorism financing.
- Record-Keeping: Reporting entities must maintain records of customer identification, transactions, and due diligence measures for a specified period. These records must be sufficient to enable authorities to reconstruct transactions and demonstrate compliance with AML and CTF requirements.
- Training and Internal Controls: Reporting entities are required to establish and maintain internal controls and compliance programs to ensure adherence to AML and CTF regulations. This includes providing training to employees on their obligations, conducting risk assessments, and implementing measures to detect and prevent money laundering and terrorism financing activities.
- Reporting Obligations to Authorities: In addition to reporting suspicious transactions, reporting entities may have other reporting obligations to regulatory authorities. This may include reporting large cash transactions, cross-border fund transfers, and other activities specified in the regulations.
- Independent Audits and Reviews: Institutions must conduct independent audits and reviews of their AML/CFT programs to ensure compliance with regulations and to assess the effectiveness of their internal controls and procedures.
WHO ARE THE
ML/TF regulators in Mexico and what functions do they perform?
In Mexico, the regulators responsible for overseeing and enforcing anti-money laundering (AML) and counter-terrorism financing (CTF) measures are primarily:
- Financial Intelligence Unit (Unidad de Inteligencia Financiera - UIF): The UIF is the primary government agency responsible for receiving, analysing, and disseminating reports on suspicious transactions related to money laundering and terrorism financing. It operates under the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público - SHCP) and plays a central role in combating financial crimes in Mexico.
- National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores - CNBV): The CNBV is the regulatory authority responsible for overseeing compliance with anti-money laundering regulations in the financial sector, including banks, credit unions, brokerage firms, and other financial institutions. It conducts inspections, issues guidelines, and imposes sanctions on entities for non-compliance with AML/CFT requirements.
- National Insurance and Surety Commission (Comisión Nacional de Seguros y Fianzas - CNSF): The CNSF regulates and supervises insurance companies and intermediaries in Mexico to ensure compliance with AML/CFT regulations within the insurance industry.
- National Commission for the Protection and Defense of Users of Financial Services (Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros - CONDUSEF): CONDUSEF is responsible for protecting the rights and interests of financial services consumers in Mexico. While not a primary AML/CFT regulator, it may play a role in consumer education and awareness regarding AML/CFT issues.
- Securities and Exchange Commission (Comisión Nacional de Valores - CNV): The CNV regulates and supervises securities markets and participants in Mexico, including stock exchanges, brokerage firms, investment advisors, and asset management companies, to ensure compliance with AML/CFT regulations in the securities sector.
- Attorney General's Office (Procuraduría General de la República - PGR): The PGR is responsible for investigating and prosecuting money laundering and terrorism financing offences in Mexico. It works closely with the UIF and other law enforcement agencies to pursue criminal cases related to financial crimes.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
The regulated industry sectors in Mexico subject to AML and CTF regulations include, but are not limited to:
Designated Non-Financial Businesses and Professions (DNFBPs)
Including lawyers, notaries, accountants, real estate agents, trust and company service providers, dealers in precious metals or stones, and other professionals or businesses engaged in high-value transactions.
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
The penalties for non-compliance with money laundering and terrorism financing laws in Mexico can include the following:
- Administrative Sanctions: Regulatory authorities, such as the Financial Intelligence Unit (FIU), the National Banking and Securities Commission (CNBV), and other relevant supervisory bodies, have the authority to impose administrative sanctions on entities found to be in violation of AML/CTF regulations. These sanctions may include fines, warnings, temporary suspensions of operations, or revocation of operating licences.
- Criminal Penalties: Serious violations of AML/CTF laws may lead to criminal prosecution. Individuals or entities engaged in money laundering, terrorism financing, or related offences may face criminal charges, which can result in imprisonment, substantial fines, asset freezing or seizing or any combination of these. Criminal penalties may vary depending on the severity of the offence and applicable laws.
- Civil Penalties: In addition to administrative and criminal sanctions, non-compliance with AML/CTF laws may expose individuals and entities to civil penalties. This could involve legal action brought by regulatory authorities or affected parties seeking damages for harm caused by the violation of AML/CTF regulations.