Money laundering is an activity in which a person or criminal organization, processes financial profits resulting from illegal activities, to give them a semblance of resources obtained lawfully.
In 1986, the United States of America C issued the so-called «Law of Money Laundering Control,» which named this crime, and punished it with imprisonment up to 20 years. Definitely, this affected the Mexican government decision of issuing the Federal Law on the Prevention and Identification of Operations with Illicit Resources.
CREATION OF THE ANTI – MONEY LAUNDERING LAW
The so named Anti – Money Laundering Law officially known as the Federal Law for Prevention and Identification of Transactions Involving Funds from Illegal Activities was issued by Mexico’s Congress on October 17, 2012, in order to protect the financial system and the economy, establishing measures and procedures to prevent and detect acts or transactions involving illegal proceeds.
The law went into effect in July and focuses on “vulnerable activities,” or industries like gaming, jewelry, automobile, art and real estate that are often targets for money laundering because they handle large amounts of cash. The requirements vary per sector, but for most, cash transactions over a certain amount must be reported to the government. In certain cases, identification is required for purchases regardless of the form of payment.
The bill defines the term “vulnerable activities” as those which give rise to the obligation of identifying the client, the client’s business or professional activity, obtaining information on the beneficiary of the transaction, preserving the relevant documentation and of facilitating review by the authorities of the information relating to such activity, and finally, to the obligation of reporting the activity to the SHCP once a certain threshold is reached. These are described below, among others:
- Those relating to gaming activities, games and contests, meets or lotteries and raffles conducted by decentralized entities, when a threshold of 20,000 pesos is reached on the sale of the tickets, chips or similar vouchers used to conduct any of the former activities, or generally when the amount of the prizes to be paid on any of the former activities exceeds such threshold or when any related financial transaction, carried out singly or as a series of apparently related transactions is equal to or exceeds such amount. Acts or transactions in amounts equal to or in excess of 40,000 pesos must be reported.
- Habitual business or professional activities involving the issuance or marketing of service, credit, prepaid cards and all stored value cards that are not issued or marketed by banking institutions provided that: the issuer or business entity marketing them maintains a business relationship with the person who acquires them, the instruments allow for the transfer of funds, or when they are marketed from time to time. In regard to service or credit cards, when the aggregate monthly expenses charged to the account is equal to or exceeds fifty thousand pesos. For pre-paid cards, when they are marketed for an amount equal to or greater than 40,000 pesos per transaction. All other stored value instruments shall be governed by the regulations issued under this statute. Transactions must be reported when the aggregate monthly amount charged to the card is equal to or exceeds 80,000 pesos. In the case of pre-paid cards, when they are marketed for amounts equal to or greater than 40,000 pesos.
- Habitual business or professional activities involving the granting of secured or unsecured credit and loans, and acting as surety in transactions of this kind, by persons or entities other than financial entities. Transactions involving amounts equal to or greater than 100,000 pesos must be reported.
- Habitual business or professional activities involving the marketing and brokerage of precious metals, gems, jewelry or watches, when involving the purchase and sale of these goods in acts or transactions for amounts equal to or greater than 50,000 pesos, exception made of transactions of this kind in which the Mexican central bank is involved. Cash transactions with a client equal to or greater than 100,000 pesos must be reported.
- Habitual business or professional activities involving the sale at auction or marketing of works of art, involving purchase and sale transactions in amounts equal to or greater than 150,000 pesos. Transactions equal to or in excess of 300,000 pesos must be reported.
- Habitual business or professional activities involving the marketing of and dealership in new and used motor vehicles, aircraft or maritime vessels with a value equal to or greater than 200,000 pesos. Transactions in amounts greater than 400,000 pesos must be reported.
The main way to detect activities classified as sensitive, is through the submission of reports to the Ministry of Finance in the forms approved for that purpose which will have to be presented starting on January 17th, 2014.
But not only through the submission of reports the Mexican Government will detect vulnerable activities, but also because it has been giving the power to make at any moment visits to companies in order to detect them.
However, all the information and the identity of those who submit the reports will be confidential in accordance with the Federal Law of Transparency and Access to Public Government Information and will be exclusively used for the identification, investigation and punishment process of operations with illegal proceeds and federal crimes.
The Secretary of Finance and Public Credit will be the responsible of punishing those who violate the provisions of the Anti – Money Laundering Law.
A clear example of this is that the largest fine will be imposed on people that do not submit their reports to the Secretary of Finance and on people who participate in any of the acts or transactions prohibited. Those penalties are definitely excessive, in accordance with Article 22 of the Mexican Constitution.
Also, it must be said that there are not only financial penalties imposed by the Anti – Money Laundering Law but also we can find some like the following:
- Cancellation of gaming permits;
- Revocation of the notary public’s patent, and
- Cancellation of the patent granted to the agents and customs brokers.
Money laundering has negative effects on the economy of a country and it is obvious that the authorities do not have adequate data to help them quantify the phenomenon and take appropriate measures against that so it is acceptable the Government’s intentions of enhancing measures in the fight against organized crime. However, it will be important for those people that do what the Mexican authorities call vulnerable activities to be informed of the obligations that they now have, in order to prevent a possible fine.