AML Compliance Guidelines: Mexico

Regulatory Bodies in Mexico

The regulatory bodies regulating the AML regulations are:

Financial Intelligence Unit (Unidad de Inteligencia Financiera – UIF)

This is a key agency responsible for analyzing financial transactions that could be related to money laundering or terrorist financing. The UIF operates under the umbrella of the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público – SHCP).

National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores – CNBV)

This body oversees the banking and securities sectors. It’s responsible for ensuring that banks, broker-dealers, and other financial entities under its jurisdiction comply with AML/CFT provisions of the LFPIORPI.

Procuraduría General de la República (PGR)

The PGR is Mexico’s Attorney General’s Office. PGR’s duties include investigation and prosecution of money laundering and terrorist financing.

Federal Law for the Prevention and Identification of Operations with Resources from Illicit Origin (LFPIORPI)

Article 17

• This article discusses the duty of those who undertake vulnerable activities to identify their clients or users by obtaining proof of identity. This obligation is also extended to knowing the structure and business of the customer when a legal entity is involved. This is indicative of EDD, as it underscores the importance of understanding the client, their source of funds, and the nature of their business, especially when dealing with high-risk customers or complex business structures.

Article 18

• This article emphasizes the need to maintain documentation and information related to the identification of clients and the operations they perform. This extends to records of those operations which exceeded the limits set by the Law for a period of five years. The emphasis on record-keeping suggests an element of EDD, ensuring that entities have detailed information on higher-risk clients or transactions for retrospective analysis if required.

Article 21

• Entities are obligated to submit a report to the Financial Intelligence Unit when they conduct vulnerable activities that exceed the limits set by the Law. This article underscores the importance of additional scrutiny (akin to EDD) for higher-value transactions or those that inherently carry more risk.

Article 23

• This article lists out specific scenarios where the reporting obligation does not apply. Understanding the exceptions is crucial for entities to apply the right level of due diligence – standard or enhanced – based on the nature of the transaction and the client.

Article 28

• To lay out punitive measures for entities or individuals who fail to adhere to the mandates of the law.
• Monetary Fines: This could vary based on the gravity of the breach. For instance, a minor oversight might incur a smaller penalty compared to a major violation.
• Administrative Penalties: This could involve formal warnings, mandatory corrective actions, and possibly other types of punitive actions that aim to rectify and deter future violations.

Article 29

• A preventive measure to halt the movement or utilization of assets tied to suspicious or illicit activities.
• Criteria for Freezing: Defines conditions under which assets can be frozen. These conditions would typically involve substantial suspicion or evidence linking the assets to illicit activities.
• Duration: Specifies how long assets can be frozen without further legal action.
• Scope: The breadth of assets that can be frozen, which may include bank accounts, properties, and other forms of tangible and intangible assets.

Article 30

• A deeper delve into the modalities of freezing assets.
• Procedural Steps: The steps or process that authorities must follow before and after freezing assets.
• Rights of the Accused: It’s likely this article also touches upon the rights of the individuals or entities whose assets have been frozen, such as their right to be informed, right to appeal, etc.
• Conditions for Release: Under what circumstances the frozen assets can be released, either because of a successful appeal or a lack of evidence substantiating their illicit origin.

References:

1. ICNL-Federal Law for the Prevention and Identification of Operations with Resources from Illicit Origin