New Mexican Anti-Money Laundering Regulations Take Effect

On October 17, 2012, Mexico passed the Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita (the "Anti-Money Laundering Law" or "AMLL"). The AMLL represents a major sea change in the way in which cash transactions (even intra-company) are handled in Mexico. 

The AMLL and its accompanying regulations impose stringent duties on a broad array of Mexican companies or foreign companies transacting business in Mexico. Companies that effectuate certain cash transactions, engage in real estate ventures, or serve as financial institutions (among others) in Mexico may now be required to meet new identity verification, information gathering, and reporting requirements.

The AMLL’s stated objective is to protect Mexico’s economy and financial system from transactions that potentially involve illegal funds. The AMLL tasks the Secretaría de Hacienda y Crédito Público (the Ministry of Finance) and Mexico’s Attorney General with promulgating and enforcing regulations to assist in the identification, investigation, and prosecution of transactions involving illegal funds. Possible sanctions for failure to comply include:

  • Fines up to 100 percent of a transaction’s underlying value;
  • Revocation of permits; and
  • Potential prison terms of up to 10 years.

Under the AMLL, activities designated by the regulation as "vulnerable" may trigger:

  • Identity verification requirements;
  • Information gathering requirements;
  • Reporting requirements; and
  • In some cases, an outright ban.

The exact breadth of subsequent enforcement measures by the Ministry of Finance and Attorney General remains to be seen. What is certain is that a wide range of companies must undertake affirmative and immediate steps to ensure compliance with Mexico’s new anti-money laundering regulatory framework. As part of a comprehensive legal strategy, affected companies must consider:

  • Establishing procedures to prevent and detect transactions potentially impacted;
  • Ensuring that reporting and documentation requirements are met;
  • Retaining and safeguarding information related to certain activities;
  • Facilitating state inspections; and
  • Submitting regular reports on transactions falling into the AMLL’s "vulnerable" category.

Additionally, some entities must appoint a representative empowered to certify compliance before the Ministry of Finance.

Examples of some of the activities and reporting requirements that may be impacted include:

 Activity

Identity Verification Triggered
(Transactions in excess of ...) 

Reporting Requirement Triggered
(Transactions in excess of ...)

 Ban Triggered
(If cash or precious metals, transactions in excess of ...)

Granting of secured or unsecured credit or loans, acting as a surety, by entities other than financial institutions

Always

$8,107.24 USD

 

Gaming, raffles, lotteries, sweepstakes

$1,641.67 USD

$3,258.06 USD

 $16,214.64 USD

Issuance or marketing of service, credit, prepaid cards, and all stored value cards not issued by a banking institution where issuer maintains a business relationship with acquirer, instruments allow transfer of funds, or are marketed from time to time

Aggregate monthly expenses > $4,066.22 USD (credit)
Marketed for amount
> $3,258.06 USD (pre- paid cards)

$6,490.85 USD

$3,258.06 USD (pre-paid cards)

 

Issuance or marketing of traveler’s checks by entities other than financial institutions

Always

$3,258.06 USD

 

Construction, real estate development, title conveyance intermediaries, creation of liens and encumbrances, involving purchase and sale transactions of real property

Always

$40,536.52 USD

$40,536.52 USD (purchase/sale)

$16,630.40 USD (lease)

Marketing and brokerage of precious metals, gems, jewelry, or watches except transactions involving Mexico’s central bank

$4,066.22 USD

$8,107.24 USD

$16,630.40 USD

Marketing of and dealership in new and used motor vehicles, aircraft, or maritime vessels

$16,630.40 USD

$32,429.20 USD

$16,630.40 USD

Armoring services

$12,173.54 USD

$24,321.88 USD

$16,630.40 USD

Cash transportation and custody services, except those carried out by Mexico’s central bank and securities depositary institutions

Always

$16,630.40 USD

 

Certain real estate lease transactions

$8,107.24 USD (monthly)

$16,630.40 USD (monthly)

$40,536.52 USD 

Purchase/sale of shares or equity 

   

$16,630.40 USD 

 

Topics:  Anti-Money Laundering, Mexico, White Collar Crimes

Published In: General Business Updates, Criminal Law Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Reed Smith | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »