Background on Javier Corral and the Relevance of the Reform
Javier Corral, a Mexican senator from the Morena party, spearheaded the reform to the Anti-Money Laundering Law (Ley Antilavado). This legislative change aims to address recommendations from the Group of Action Financial International (GAFI), which will evaluate Mexico’s anti-money laundering and counter-terrorism financing efforts this year.
Legislative Details and Key Concerns
The Mexican Chamber of Deputies approved, both in the general and particular sessions, the reform to the Anti-Money Laundering Law. This amendment modifies the Federal Law for the Prevention and Identification of Operations with Illicitly-Obtained Resources (LFPIORPI) as well as the Federal Criminal Code. The bill now moves to the federal executive.
The session took place amidst a rushed discussion, with the opposition raising concerns about excessive regulation, risks to individual liberties, and lack of clarity in certain aspects of the initiative.
Main Concerns Raised by Opposition
- Excessive Regulation and Risks for Small Businesses: Panista César Augusto Rendón expressed concern that expanding obligations to new sectors, such as real estate developers, virtual asset providers, and legal professionals, could create an environment of uncertainty. He argued that imposing new burdens without adaptation periods or training programs might push small and medium-sized enterprises (SMEs) towards informality or paralysis.
- Vague Definition of “Politically Exposed Persons”: The reformed law defines a “politically exposed person” as an individual who has performed or is expected to perform public functions in Mexico or abroad, as well as related individuals meeting criteria established by the Secretariat of Finance and Public Credit (SHCP). Critics, like diputada Iraís Reyes de la Torre from Movimiento Ciudadano, argued that this definition lacks clear limits and could be used discretionally, potentially leading to persecution without effective judicial controls.
Key Aspects of the Reform
The reform includes several modifications, such as:
- Expanding the concept of “beneficiary controller”
- Defining Non-Profit Organizations
- Updating the definition of “business relationship”
- Extending the list of vulnerable activities and introducing “politically exposed persons”
- Implementing a simplified identification regime for public clients
- Establishing training, audits, risk monitoring, and evaluation
- Encouraging collaboration between the finance department and the National Guard, as well as other institutions
- Protecting the identity of compliance officers
Additionally, the reform promotes automated risk management systems, internal and external audits, expanded reporting obligations for notaries and brokers, the Unidad de Monitoreo Económico (UMA), strengthened sanctions, and recognizing the Financial Intelligence Unit (UIF) as a victim.
Contextual Factors
This legislative reform comes concurrently with the U.S. Department of the Treasury’s sanctions against CIBanco, Intercam, and Vector for money laundering.
