Relevant aspects of the new Law against Money Laundering
By Sergio Guerrero Rosas, Guerrero y Santana, S.C.
In October 2012, President Felipe Calderón of Mexico announced the Federal Law for the Prevention and Identification of Operations with Resources of Unlawful Origin, better known as the Law Against Money Laundering, in the Official Publication of the Federation. Despite the early decision in the President's administration to confront the criminality which had become the major threat to the peace and integrity of the state – and to do so with all its available resources, in its first years, the government's strategy to bring down and arrest dozens of drug trafficking capos failed to place the same level of importance on the finances of the cartels.
Yet, while it may appear strange to see Mexico struggling in its fight against the kind of financial irregularities posed by the cartel practices, it should be remembered that only two years ago, it successfully implemented requirements for and limits on the use of the U.S. cash dollar; measures which, according to official calculations, reduced circulation of the dollar in Mexico by 70%.
Meanwhile, the new law has been designed to continue detecting and investigating potentially illegal resources by focusing on those commercial operations considered most susceptible to being utilised for laundering purposes. Limits have therefore been established on the use of cash in operations related to the acquisition of goods and capital that exceed certain quantities.
Among the "vulnerable activities" are gambling, betting and raffles; the marketing of department store prepayment cards; the approval of loans and pawnshop credit; construction and development projects and the buying and selling of real estate; dealings in art work and precious stones; and the acquisition of vehicles, planes and yachts.
Furthermore, non-financial intermediaries of economic transactions are now obliged to verify the identity of their clients, providing information on their activities and occupations or sources of income; documentation of which must be retained and conserved for a period of five years. In addition, new obligations have also been placed on financial institutions. Banks and bureaux de change must establish measures and procedures to prevent and detect suspicious activities. Among others, such precautions include formal, regular reports on vulnerable activities to be presented to the Secretary of the Treasury and Public Credit (SHCP).
As a result, in order to verify that activities of intermediaries and financial institutions are in accordance with the new law, another stipulation is that a unit specialising in financial analysis be created, focused on the investigation of suspicious operations. Moreover, the SHCP has been granted the facility to carry out inspections, with the right to apply sanctions of up to 100% of the value of operations of those groups failing to follow these practices.
Limits which the new law considers to be vulnerable activities and therefore have to be reported to SHCP include:
- Gambling, betting and raffles USD 3,000
- Marketing of prepayment cards USD 3,800 or above
- Marketing of precious metals USD 7,600
- Artwork USD 23,000
- Cars above 400,000 and armour USD 23,000
- Attorney services USD 38,500
- Donations USD 15,000
Sergio Guerrero RosasGuerrero y Santana, S.C., Tijuana, Baja California, Mexico
T: +52 33 3120 0538
Sergio Guerrero Rosas is the founder and Managing Partner of Guerrero Santana. He has 12 years’ experience consulting for Austrian, Italian, Japanese, Chinese, Mexican and American companies, which has shaped his professional profile. Sergio is fluent in Spanish and English. He provides tax and management consulting services to a wide variety of organisations.
Guerrero Santana S.C. was founded in 2003 with a team of business, tax and legal experts, and is today one of the most important professional service providers in Mexico, offering personalised and comprehensive support to individuals, sole traders, corporations and multinationals.