Security & Fraud

Mexico AML Found Deficient

The Financial Action Task Force (FATF), an international organization that sets the standards for fighting money laundering, found that Mexican prosecutors are failing to punish finance criminals.

Reuters, citing the FATF, reported that in addition to failing to punish money launderers, Mexico’s tax authorities aren’t regulating money from real estate and luxury goods firms, which are just a front for drug operations.

The allegations came in a draft report on Mexico’s efforts to fight back against illicit finance. Mexico is also slipping when it comes to conviction rates, lagging behind Colombia and Brazil, two countries that have made strides to fight money laundering.

“Money laundering is not investigated and prosecuted in a proactive and systematic fashion,” said the draft of the report, sections of which were seen by Reuters. The report is slated to be published in early January.

The FATF did credit Mexico with cleaning up the banking industry in the country. That action was prompted by a U.S. investigation in the mid-2000s that revealed global banks were processing billions of dollars in money that came from drug cartels and gangs. As a result, strict regulations were put into place that pushed the illegal money out of the banking system.

However, tax authorities are dropping the ball when it comes to fighting money laundering outside the banking sector, including within real estate – despite the fact that Mexico’s tax authority was given the power to audit more than 64,000 businesses that were in the high-risk category in 2014. Since then, the country has only appointed 16 workers to investigate the companies and has audited only 118 of them, a 0.2 percent rate. The report noted that without a national registry of shareholders in the companies, it’s difficult to follow the money trails.


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