Mexican newspaper “El Financiero” reported on 13 May 2014 that there has been a significant drop of luxury car sales in Mexico since September 2013 when the new Mexican anti-money laundering law (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita) came into force. The law constitutes an important step in the country’s efforts to constrain organized crime and decrees ample obligations of notification and reporting on businesses operating in Mexico. The new law in particular widens the scope of the current legal framework against money laundering in Mexico: On the one hand, it establishes an institutional framework under which central Mexican Authorities (both, financial and law enforcement authorities) are vested with the necessary powers to prevent and detect acts or transactions carried out with funds obtained from illicit activities. On the other hand, the new law establishes the obligation of a number of businesses and professionals to report “vulnerable activities” to the newly established federal authorities. When defining a set of “vulnerable activities” that are subject to reporting, the new law identifies specific activities which are presumed to be prone to the use of illicit funds. In particular, it orders a broad duty to notify donations; it regulates construction services, property development, and the sale or purchase of goods on behalf of clients; and it restricts the sale and purchase of new and secondhand cars, boats and planes. Also, independent professional services representing clients and public faith are regulated more strictly. Persons acting under powers of attorney when conducting administrative acts or engaging on capital markets must report any operation that is linked to money laundering within one day. For lawyers, this obligation constitutes an express exception to client confidentiality. Notary publics are held to report any major transactions conducted through their offices. Given the tremendous amount of work demanded from business to comply with the new law, including the build-up of intra-company mechanisms, many corporations have sought (interim) relief. However, Mexican courts have been very reluctant to delay applicability of the new law by all means. On the contrary, sanctions for non-compliance with the new law are strict. They range from severe monetary fines, over the revocation of essential business licenses, up to imprisonment for those in leadership.
Nicolai Behr is a compliance and dispute resolution attorney in Baker & McKenzie’s Munich office. He is a member of the steering committee of GlobalComplianceNews, a compliance news website with global reach moderated by Baker & McKenzie. He is a member of the committee "International" of the German Institute for Compliance. Dr. Behr is a regular speaker on compliance and white collar topics.