One of the main problems that Mexican governments have faced in recent years has been the battle against the laundering of assets, and have implemented different strategies over such issue; since 2000, Mexico is a member of an intergovernmental organization known as FATF (Financial Action Task Force on Money Laundering), created in 1989 with the main objective of developing policies, measures and recommendations to combat money laundering and terrorist financing; derived from such recommendations, in Mexico came into effect, as from July 2013, the Federal Law for Prevention and Identification of Transactions with Resources of Illicit Origin, commonly referred to as “Anti Money Laundering Law”
Who is subject to the Anti Money Laundering Law?
The Anti Money Laundering Law, in order to fulfill its aim, considers important to monitor certain economic activities from several sectors not belonging to the financial sector, such as: Real Estate Developers, companies dedicated to gaming and lottery such as casinos, companies dedicated to granting mutual services, loans or credits, armoring services, properties, jewelry and precious metals, works of art, vehicles, professional services such as realtors, resource managers such as condominium managers (Home Owners Association), certain legal and accounting services, non-profit associations that receive donations among others.
Nevertheless, nowadays, the compliance of the obligations that arise from the Anti Money Laundering Law by the entities dedicated to the activities mentioned above has been really low in accordance to what is stated by the corresponding authorities monitoring its compliance, which triggers endless economic sanctions to such silent entities, due to the fact that these legal administrative obligations have sanctions for late compliance; that is why legislators considered it appropriate to issue a facility so such businessmen could catch up on the Anti Money Laundering Law.
On December 28th, 2018 in its fourteenth transitory article of the Income Law for 2019, a program for self-regularization was published, where the main benefit is that no sanctions will be imposed regarding the non-compliance period if the self-regularization program is implemented, regarding the period since the origin of the Anti Money Laundering Law, from July 1st, 2013 to December 31st, 2018, with such obligations protected by articles 17 and 18 of the previously mentioned law.
Which obligations are underpinned in articles 17 and 18 of the Anti Money Laundering Law?
The obligations protected by this self-regularization program are basically the following:
- Identification of clients and users.
- When there is a business relationship the client or user will be asked for its activity or occupation.
- Information on the beneficial owner’s awareness.
- To safe keep, protect, and avoid the destruction or hiding of information and documentation that can act as a support for Vulnerable Activities.
- Provide facilities in monitoring visits.
- Present notices in time and manner.
“The enforcement of sanctions will not proceed regarding the non-compliance period when protected by the self-regularization program.”
Requirements to apply for the program
The main application requirement for a natural or legal person with vulnerable activities is that they keep up with all their tax obligations in 2019, which is why we encourage verifying if such obligations are being met in time and manner, if you have any questions in this matter do not hesitate to contact an expert.
What will happen to the other obligations?
I consider that this facility has fallen short in comparison to the motivation of such program since the legislator’s intention was to include all the obligations regarding the Prevention of Money Laundering and they just mentioned articles 17 and 18 of such Anti Money Laundering Law, but there are still other fundamental obligations to consider in other articles, and just to mention a few:
– Appoint a representative
– Client identification policy manual
– Single identification file, among others.
I finally wish to say that the General Rules issued by SAT (Tax Administration Service) to implement the self-regularization program are still pending, it will be no later than the first 60 working days of 2019 (March 2019).
Likewise, we hope that with such measures the authority considers extending the benefit to the other obligations as well, and not only to the ones mentioned in articles 17 and 18 of the Anti Money Laundering Law, in order to certify the legislator’s intention mentioned in the motivation of such program.
It seems important that every entrepreneur in the economic sectors previously mentioned does a self-analysis of how they presently comply with these obligations, and if such is the case to take this unique opportunity to correct any omission, making it crucial to consult an expert on the subject.
At TR&A we are able to give advice about this as well as help you with the filing of the corresponding reports. You can contact us via:
Jorge A. Cadena Lobato CAP, MTax
Telephone: +52 (322) 209 1416, (311) 2584177
This article was written by Jorge Cadena. You can find more articles and seminars in www.teranrojas.com.This article is owned by TR & Associates and its reproduction requires the written consent of Mr. Cadena, who have the rights of this work. Copyright 2018. This article is a general explanation of tax issues valid at the time of publication. “That article may be contrary to the interpretation of the tax authorities”.For each particular case we recommend obtaining written information from the applicable fiscal responsibilities of your case.