Introduction to the Global Effort Against Money Laundering and Terrorism Financing
In response to the significant economic power amassed by global terrorist and criminal groups over the years, the G7 nations (United States, Japan, Germany, France, United Kingdom, Italy, and Canada) along with eight other countries and the European Union established the Group of Action on Money Laundering (GAFI) in 1989. The primary goal was to develop policies aimed at preventing money laundering from drug trafficking. Following the terrorist attacks in the early 2000s, GAFI expanded its mandate to include combating terrorism financing.
GAFI’s Evolution and Key Recommendations
In 2012, GAFI integrated and updated 40 recommendations covering money laundering prevention, terrorism financing, beneficiary identification, and financial sanctions against the proliferation of weapons of mass destruction. Furthermore, GAFI adopted a risk-based approach to enable countries, sectors, and entities exposed to identify specific risks they face.
Mexico’s Legal Framework on Beneficiary Controlled Persons
On October 17, 2012, Mexico enacted the Federal Law for the Prevention and Identification of Operations with Illicit Origins of Funds (LFPIORPI). Article 3, fraction III, defines a beneficiary controlled person as an individual or group of individuals who benefit from an operation or exercises effective control over a legal entity, such as a corporation, trust, or other legal structure.
The law mandates that all entities engaging in vulnerable activities (defined within the law itself) must gather information to identify beneficiary controlled persons. On November 12, 2021, a reform to the Federal Tax Code was published in the Official Gazette of the Federation, effective from January 1, 2022. This reform requires all legal entities, trusts, and other legal structures to identify, obtain, maintain, and keep updated information about their beneficiary controlled persons as part of their accounting practices. Should the Servicio de Administración Tributaria request this information, it must be provided.
Recent Legal Reforms in Mexico
In recent times, various laws have been amended to strengthen anti-money laundering measures. For instance, the LFPIORPI now requires entities engaged in vulnerable activities to register their beneficiary controlled persons with the Secretary of Economy.
Who is a Beneficiary Controlled Person?
A beneficiary controlled person is an individual (physical person) who is the ultimate beneficiary of resources and operations of the mentioned entities, possessing significant influence over the entity’s decisions. This individual or group of individuals may be at the apex of a multinational corporate structure, yet their identification is crucial.
Information Required for Beneficiary Controlled Person Files
The file on a beneficiary controlled person must contain the following information:
- Full name and surname
- Aliases
- Date of birth (and date of death, if applicable)
- Sex
- Country of origin and nationality
- CURP or equivalent (for foreigners)
- Country or tax jurisdiction of residence
- Type and number or official identification key, including the federal registry of taxpayers (or its equivalent)
- Marital status and spouse information
- Contact details (email and phone numbers)
- Personal residence and fiscal domicile
- Relationship with the legal entity, degree of participation, and description of participation method (direct or indirect)
- Information on shares, social parts, or other participation means
Key Questions and Answers
- What is a beneficiary controlled person? An individual (physical person) who is the ultimate beneficiary of resources and operations of mentioned entities, having significant influence over those entities’ decisions.
- Why is identifying beneficiary controlled persons important? It helps prevent money laundering, terrorism financing, and ensures transparency in business operations transcending national borders.
- What information must be included in a beneficiary controlled person file? Full name, aliases, date of birth, sex, nationality, CURP or equivalent, tax residence, official identification, marital status, contact details, residences, relationship with legal entities, participation method, and share or part information.
