A draft reform bill to the Anti-Money Laundering Law (LFPIORPI) is circulating, dated April 1, which contemplates new obligations regarding the prevention of operations with resources of illicit origin and financing of terrorism (AML/CFT), as well as new vulnerable activities subject to such regime.

FINANCE AND BANKING / by Miguel Gallardo Guerra

New vulnerable activities.

Receipt of funds for Real Estate Development. The receipt of resources destined to carry out a Real Estate Development whose purpose is its sale or rental.

Transfer of ownership or guaranty trusts (notaries). The constitution or modification of property transfer or guaranty trusts, regardless of whether they involve movable or real property, in transactions in which notaries are involved.

Clearance of goods (foreign trade). In foreign trade matters, the clearance of goods that individuals promote without the intervention of a customs broker or customs agency, on certain goods.

Addition or modification of the circumstances for the filing of notices before the Tax Administration Service (“TAS”).

Transfer or custody of money or securities. In relation to the provision of services of transfer or custody of money or securities, the notice must be filed with the TAS when it is not possible to determine the amount of the transferred or kept in custody.

Transfer or constitution of real rights over real estate (notaries). In relation to the provision of services by notaries, the notice must be filed with the TAS when the transfer or constitution of real property rights transactions are carried out for an amount equal to or greater than the equivalent of 8,000 UMAs (as of today, approximately MXN$905,120 or USD$46,253), considering the agreed price, the assessed value, the commercial value of the property or, if applicable, the amount guaranteed.

Incorporation of legal entities and other corporate acts (notaries). In relation to the provision of services by notaries, the notice must be filed with the TAS when the operations of incorporation of legal entities, their modification of assets, merger or spin-off, as well as the purchase and sale of shares and corporate parts are carried out for an amount equal to or greater than the equivalent of 4,000 UMAs (as of today, approximately MXN$452,560 or USD$23,127).

Incorporation or modification of property transfer or guarantee trusts (notaries). In relation to the provision of services by notaries, the notice must be filed before the TAS when the constitution or modification operations of property transfer or guarantee trusts are carried out for an amount equal to or greater than the equivalent of 4,000 UMAs (as of today, approximately MXN$452,560 or USD$23,127).

Virtual Assets.

Foreign VASPs. It includes the clarification that foreign virtual asset service providers (VASPs) or exchanges that carry out operations with Mexican citizens must comply with the Anti-Money Laundering Law (its Regulations and General Rules), in accordance with the criteria issued by the Financial Intelligence Unit in August 2021.

Travel Rule. It includes the obligation addressed to exchanges or VASPs to obtain information on the originator and receiver in transactions with virtual assets, in compliance with recommendation 16 issued by the Financial Action Task Force (FATF) and its interpretative note. The foregoing in accordance with the elements that will be subsequently indicated by the Ministry of Finance and Public Credit (“MFPC”) by means of an amendment to the General Rules of the Anti-Money Laundering Law. 

Modification of assumptions for the filing of notices. The cases for the filing of notices before the TAS are modified according to: 

• Any type of transaction (exchange, purchase, sale and/or transfer) for an amount equal to or greater than 210 UMAs (as of today, approximately MXN$23,759 or USD$1,214) must be reported; and/or

• When, for the service provided, such transactions give rise to the collection of a fee equal to or greater than 4 UMAs (as of today, approximately MXN$452 or USD$23).

Additional AML/CFT obligations.

Conservation period and records of transactions. The information and documentation must be kept for a period of 10 years, including that the records of the transactions carried out allow the reconstruction of individual transactions in terms of what the MFPC may subsequently indicate through an amendment to the General Rules of the Anti-Money Laundering Law.

24-hour notices, even with respect to transactions that have not been executed. To file “24-hour” notices before the TAS in case of suspicion or information based on facts or indications that the resources related to any transaction could come from or be destined to the commission of the crime of money laundering or terrorism, even if the transaction was not executed. 

Entity-Client RBA. Elaborate an evaluation with a risk-based approach at the company and client level, in terms of what will be subsequently indicated by the Ministry of Finance and Public Credit through an amendment to the General Rules of the Anti-Money Laundering Law.

Politically Exposed Persons (“PEPs”). Identify and follow up on transactions carried out by PEPs.

EDD. Enhanced due diligence on PEPs and customers/users classified as high risk. 

Personnel selection. Develop internal processes for personnel selection. 

Training. Adoption of ad-intra training programs. 

Automated systems. To have automated systems for monitoring transactions and alerting on those that are not within the usual transactional profile of customers, in accordance with the elements that will be subsequently indicated by the MFPC by means of an amendment to the General Rules General Rules of the Anti-Money Laundering Law. 

Annual audits. Conducting annual audits for the evaluation and assessment of the effectiveness of compliance with the obligations set forth in the Anti-Money Laundering Law, its Regulations and General Rules. 

Use of cash.

It is noted that the prohibition on the use of cash for certain cases applies even when it is made by means of a cash deposit with a financial institution. 

List of national PEPs.

This draft amendment includes the obligation of the MFPC to prepare a nominative list of persons that will be considered domestic PEPs. 

Reduction of fines.

It is stated that, when the first benefit of exclusion of all penalties has already been applied, the MFPC will reduce by up to fifty percent the amount of the fines corresponding to the infractions that are regularized spontaneously and prior to the beginning of the verification powers, provided that the corresponding company expressly acknowledges the breach committed before the authority within the initial term of the sanctioning procedure.

The above in addition to the inclusion of new conducts that may warrant imprisonment for up to 8 years and fines of up to 2,000 UMAs (as of today, approximately MXN$226,280 or USD$11,563). 

Status of this initiative.

This reform bill is pending approval by the Justice and Legislative Studies Commissions of the Senate, by the full Senate and then, if applicable, by the House of Representatives for subsequent enactment by the President and publication in the Official Gazette of the Federation (“DOF”). 

The draft amendment establishes that it would enter into force the following day of its publication in the DOF, indicating that the MFPC would have a term of 12 months to carry out the amendments to the aforementioned General Rules that provide content to the added obligations in this matter.