Reforms to Mexico’s Anti-Money Laundering Law: Progress and Persistent Challenges
Reforms to Mexico’s anti-money laundering law earlier this year injected fresh hope and marked a key step forward in the fight against organized crime. However, ongoing challenges may hinder efforts to strengthen controls over suspicious financial transactions and close legal loopholes that have facilitated money laundering.
### Key Elements of the Reform
The new reforms to the Federal Law for the Prevention and Identification of Operations with Illicit Proceeds—better known as the “Anti-Money Laundering Law”—took effect in July. One of the central pillars of the changes was addressing financial support for terrorism. The reform also expanded the range of activities considered vulnerable to money laundering. These now include:
– Real estate development
– Virtual assets (cryptocurrencies)
– Betting houses
– Issuance or sale of prepaid cards
Additionally, the reform broadened the scope of entities required to report suspicious transactions. It strengthened sanctions and increased reporting requirements, such as mandating the identification of the “beneficial owner” in all transactions—those individuals who have direct or indirect control over a company, even if they are not officially listed as owners.
### Enhanced Institutional Coordination
The reform aimed to improve institutional coordination at the national level by fostering collaboration between key bodies:
– Ministry of Finance and Public Credit
– Attorney General’s Office
– Ministry of Security and Citizen Protection
– National Guard
This collaborative approach is intended to bolster the government’s ability to combat money laundering more effectively.
### Expert Perspectives: Progress Made, But Challenges Remain
Several experts consulted by InSight Crime agreed that the reform represents progress toward more robust legislation, although challenges in creating effective tools to detect money laundering linked to organized crime persist.
Ellis Matteson, head for Latin America at the law firm Miller & Chevalier, told InSight Crime that the stricter control requirements for certain companies will help standardize anti-money laundering mechanisms in Mexico. “Practices such as automated systems for detecting unusual transactions, internal and external audits, and specialized training will become more common and will help more companies identify problematic behavior,” he said.
### Legal Loopholes Persist
Despite these advancements, legal inconsistencies and potential deficiencies in the implementation of the reforms could limit their impact.
“Legislation is important but not sufficient,” noted Cecilia Farfán-Méndez, director of the North American Observatory of the Global Initiative Against Transnational Organized Crime. The low number of convictions for money laundering crimes in Mexico highlights both the complexity of investigations and the challenges facing law enforcement.
Salvador Mejía, partner at Asimetrics—a firm specializing in strategic consulting to prevent money laundering—pointed out that the regulations could be unevenly applied. For example, obligations like implementing risk matrices may be difficult for many small- and medium-sized companies to fulfill due to resource limitations.
Furthermore, some relevant industries remain outside the law’s scope. These include:
– The agricultural sector
– Sports clubs
– The entertainment industry
– The chemical industry, which is particularly vulnerable due to its role in the diversion of precursor chemicals used in illicit fentanyl production
### Implementation Will Not Be Easy
Experts also express concern over the complexity of implementing the reform.
“While at a technical level the reform improves the government’s ability to detect cases of money laundering linked to organized crime, biased implementation could trigger surveillance without clear limits, violate banking secrecy, and militarize the tools used to detect money laundering,” said Diana Paz, an international conflict specialist, in an interview with InSight Crime.
A clear example of this challenge is the incorporation of “Politically Exposed Persons” (PEP), which includes any person who has been a public official, both in Mexico and abroad, as well as other individuals meeting certain conditions and characteristics. The reform requires mandatory identification and monitoring of all those considered politically exposed.
Although this definition is necessary and useful, it lacks clarity regarding who precisely qualifies as a PEP. This ambiguity creates a legal loophole that could lead to selective persecution for political purposes.
### Concerns Over Militarization and Privacy
The reform also designates the National Guard—now controlled by the military—as one of the government institutions with investigative capabilities in money laundering cases. Emiliano Polo, a political risk analyst at Control Risks, warned this could further militarize civilian administrative roles and pose risks to individual rights.
Moreover, the Ministry of Finance and Public Credit will expand its investigative powers to obtain personal, financial, and property information without judicial authorization, raising additional privacy concerns, Polo added.
—
The recent reform to Mexico’s Anti-Money Laundering Law marks a significant step forward but also underscores the challenges ahead. Addressing these will require careful implementation, transparency, and ongoing oversight to ensure that progress is not undermined by legal ambiguities, resource limitations, or potential abuses.
https://insightcrime.org/news/new-reform-mexico-money-laundering-challenges/