Introduction
Three weeks ago, the Financial Crimes Enforcement Network (FinCEN), an arm of the U.S. Department of the Treasury, imposed sanctions on CI Banco, Intercam Banco, and Vector Casa de Bolsa. As the dust settles, it’s possible to analyze the implications not only for the sanctioned institutions but also for Mexico’s financial and corporate sectors.
The Sanctioned Institutions
At first glance, these sanctions may appear isolated and of limited importance. None of these three entities are systemic: Intercam and CI Banco hold only a small fraction of Mexico’s deposits and loans, operating mainly in specific segments without posing a risk to the financial system’s stability. CI Banco was indeed the country’s main trustee, playing a crucial role due to the volume of instruments and contracts conducted through such vehicles, especially CKD used by Afores. However, the damage is contained, and although the process may be cumbersome, these contracts can be transferred to other public or private institutions.
Vector Casa de Bolsa, while relevant among independent brokerages, does not rank among Mexico’s major stock exchange institutions.
Beyond the Sanctioned Institutions: Real Risks for Mexican Businesses
The problem revealed by these sanctions goes far beyond these three institutions. There’s a real risk for a significant portion of Mexican businesses—and the economy as a whole—if these U.S. actions continue, as all signs suggest.
It’s evident that the Mexican economy is fully integrated and dependent on the U.S. economy, with over 800 billion dollars in trade and virtually no large Mexican company operating without daily dollar transactions or dealings with the U.S. In this context, sanctions like those recently announced would be devastating for any Mexican company. This is both good news—it’s a result of a successful regional integration project lasting over 30 years—and a risk.
Risks for Mexican Companies
Today, Mexican companies—financial or not—face risks that are on the radar of U.S. authorities, partly due to the omnipresence of organized crime in our country.
- Money Laundering: Criminal organizations aim to inject large amounts of money into the formal economy, putting banks and other sectors like remittances, construction, and restaurants at risk.
- Fentanyl Trafficking alongside Trade with China: Any company transacting with Chinese businesses possibly linked to the trafficking of chemical precursors faces extremely high risks.
- Migration Aspect: The aspect of migration adds another layer of risk for Mexican businesses.
Essentially, all large Mexican companies and financial institutions are at risk not because of participation in illicit activities but due to the real possibility of being infiltrated or used by criminal organizations for money laundering or as part of their value chains. No major company, especially in Mexico, can survive without access to the financial system or transactions with the U.S.; it would be catastrophic.
This risk has always existed, but the new emphasis from U.S. authorities creates a much more pressing situation that should put the Mexican government and businesses operating in Mexico on high alert.
