Mexico rallies in several areas of AML but DNFPBs remain a problem, new FATF report reveals - AML Intelligence
Compliance & Anti-Financial Crime
Leadership | Insight | Network

AML, Analysis, CFT, North America

Mexico rallies in several areas of AML but DNFPBs remain a problem, new FATF report reveals

By Dan Byrne for AMLi

MEXICO HAS TAKEN multiple measures to improve its defences against money laundering and terrorist financing, according to the Financial Action Task Force (FATF).  

The latest verdict from the global financial watchdog is that the country has made strides in several areas, and as a result as seen its ratings in these areas go up.  

However, it also means that the issue of Designated Non-Financial Businesses and Professionals (DNFPBs) sticks out like a sore thumb even more – being the only area of forty to receive the lowest rating possible.   

As part of its constant monitoring of countries’ AML performances, FATF routinely issues “enhanced follow-up reports”, highlighting that country’s strengths, weaknesses, and areas to focus on.  

“Since the 2018 assessment of Mexico’s measures to tackle money laundering and terrorist financing, the country has taken a number of actions to strengthen its framework,” FATF said in a statement Tuesday.  

Each area of focus is essentially a recommendation and receives one of four scores: non-compliant (NC), partially compliant (PC), largely compliant (LC) and compliant (C). 

“Today, Mexico is compliant on 8 of the 40 Recommendations and largely compliant on 22 of them,” FATF said. 

“It remains partially compliant on 9 Recommendations, and non-compliant on 1 Recommendation.” 

Every recommendation that was re-rated in this latest report was re-rated upwards. They are: 

  • Politically exposed persons (PEPs) (PC-C). Recent Mexican legislation brought in requirements for beneficial ownership identification and life insurance – wherever PEPs are concerned. It also broadened the scope of what a PEP is. This was enough to earn FATF’s full seal of approval.  
  • Wire transfers (PC-C). Concerns around the information attained by FI’s around wire transfers – and when that info should lead to “exert, reject or suspend,” a transfer have been dealt with through new and clear requirements, FATF said.  
  • Reliance on third parties (PC-C). A lack of reporting and supervision on countries where third parties may be based was an issue for FATF in the last round of evaluation, but amendments to AML/CFT provisions has addressed this.  
  • Regulations around non-profits (PC-LC). FATF said that Mexico has “addressed most of the deficiencies” found in its previous report around the adequacy of regulation and targeted outreach to the non-profit sector.  
  • Customer due diligence (PCLC). Previous issues included a “lack of comprehensive requirements to identify and verify beneficial owners, narrow application of CDD rules, and limited checks on occasional customers “transacting in national currency.” Most of these have now been addressed.  
  • New technologies (PC-LC). Progress has been made here but deficiencies around the “travel rule” and information sharing means this area doesn’t earn a C rating.

The one remaining recommendation labelled NC is around DNFPBs. These are individuals outside the traditional financial system, but still with enough involvement that AML/CFT risk applies to them.  

Examples include lawyers, real estate agents, trusts and dealers of precious materials.  

Mexico was given the non-compliant rating in 2018 because it “did not subject DNFBPs to the AML/CFT regime.” It appears likely then that not much, if anything, has changed about this since.  

Share this on:

Follow us on:

AML Intelligence
We hope you enjoyed reading this article

If you would like unlimited access to AML Intelligence premium articles, newsletter delivered twice a week, access to our Global Bank Fines and Penalties database, free access to Boardroom Series events and much more, select one of our subscription options and become a subscriber!