[23/07/2016].
Allow us to share with you the most relevant aspects of the recent issuance of the Federal Law for the Prevention and Identification of Operations with Resources of Unlawful Origin (the Anti-Money-Laundering Law).
On October 17th of this year, the Ministry of Finance and Public Credit published in the Official Federal Gazette the decree issuing the Anti-Money-Laundering Law. The basis of this new law is the establishment of a new legal concept defined as “Vulnerable Activities”, which are subject to extensive regulation. A good part of the new supervision obligations fall on testifying public officials (notaries and commercial notaries) who become de facto auditors of the operations in which they are involved and in which they identify Vulnerable Activities. New special federal crimes are also created, which are prosecuted by the PGR with the help of the Financial Intelligence Unit of the Ministry of Finance and Public Credit (SHCP).
The main purpose of the Anti-Money-Laundering Law is to protect the financial system and the national economy through the establishment of measures and procedures to prevent and detect acts or operations that involve resources of unlawful origin. It attempts to establish an inter-institutional coordination that makes it possible to investigate and prosecute the new crimes, attach the financial structures of criminal organizations, and prevent the use of resources produced by unlawful activities.
Vulnerable Activities
The Law considers as vulnerable certain activities or operations that have commonly been used for money-laundering, which according to figures of the Legislative Studies Commission of the Senate in our country come to more than 3 billion pesos annually. The activities marked as vulnerable by the Law are:
The acts, operations and services carried out by Financial Entities in accordance with the Laws that regulate them in each case.
Those listed in article 17 of the Law, which are:
a) Those linked to the practice of betting games, contests or lotteries carried out by decentralized bodies or carried out under the regime of the Federal Law of Games and Lotteries, only when the value of any of the operations is for an amount equal to or greater than the equivalent to three hundred twenty-five times the minimum wage in effect in the Federal District ($20,257.25 pesos) provided they are done in any of the following forms:
Sale of tickets, cards or any other type of similar receipt for participating in such games, contests or lotteries, as well as the payment of the value they represent;
Delivery or payment of prizes and the carrying out of any financial operation (whether carried out individually or in a series of transactions linked in appearance with the persons who participate in such games, contests or lotteries).
When the amount of the act or operation is equal to or greater than the equivalent to six hundred forty-five times the minimum wage in force in the Federal District ($40,202.85 M.N.), these activities will be subject to a Notice to SHCP.
b) The issuance or regular or professional commercialization of service cards, credit cards, prepaid cards and all those that constitute an instrument for storing monetary value, that are not issued or commercialized by Financial Entities, provided the issuer or seller of such instruments maintains a business relationship with the buyer, such instruments permit the transfer of funds or their commercialization is occasional.
They will be considered vulnerable activities in the case of services or credit cards when the accrued monthly spending in the card account is equal to or greater than the equivalent to eight hundred five times the minimum wage in effect in the Federal District ($50,175.65 pesos), and they will be subject to a Notice to SHCP when the accrued monthly spending in the card account is equal to or greater than one thousand two hundred eighty five times the minimum wage in effect in the Federal District ($80,094.05 pesos).
They will be considered vulnerable activities, in the case of prepaid cards, when their sale is made for an amount equal to or greater than the equivalent to six hundred forty-five times the minimum wage in force in the Federal District, per operation ($40,202.85 M.N.). They will be subject to a Notice to SHCP when they are sold for an amount equal to or greater than the equivalent to six hundred forty-five times the minimum wage in force in the Federal District ($40,202.85 pesos).
c) The issuance and regular or professional commercialization of travelers’ checks, other than those sold by Financial Entities.
They will be subject to a Notice to SHCP when the issuance or commercialization of the travelers’ checks is equal to or greater than the equivalent to six hundred forty-five times the minimum wage in effect in the Federal District ($40,202.85 pesos).
d) The regular or professional offering of loan or guarantee operations or credit, with or without guarantee, by those who are not Financial Entities.
They will be subject to a Notice to SHCP when the act or operation is for an amount equal to or greater than the equivalent to one thousand six hundred five times the minimum wage in the Federal District ($100,039.65 pesos).
e) The regular or professional providing of construction services or development of real estate or brokerage in the transfer of property or creation of rights over such goods, which involve purchase and sale operations of the goods themselves for or on behalf of clients from whom they provide such services.
They will be subject to a Notice to SHCP when the act or operation is for an amount equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage in the Federal District ($500,198.25pesos).
f) The regular or professional commercialization or brokerage of precious metals, precious stones, jewelry or watches, involving purchase or sale operations of such goods in acts or operations whose value is equal to or greater than the equivalent to eight hundred five times the minimum wage in effect in the Federal District, except for those in which the Bank of Mexico is involved
They will be subject to a Notice to SHCP when those doing them carry out an operation in cash with a client for an amount equal to or greater than the equivalent to one thousand six hundred five times the minimum wage in effect in the Federal District ($100,039.65 pesos).
g) The regular or professional auction or commercialization of works of art involving purchase or sale operations of such goods done by acts or operations with a value equal to or greater than the equivalent to two thousand four hundred ten times the minimum wage in force in the Federal District ($150,215.30 pesos).
They will be subject to a Notice to SHCP when the amount of the act or operation is equal to or greater than the equivalent to four thousand eight hundred fifteen times the minimum wage in force in the Federal District ($300,118.95 pesos).
h) The regular or professional commercialization of vehicles, new or used, whether air, maritime or land with a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District ($200,079.30 pesos).
They will be subject to a Notice to SHCP when the amount of the act or operation is equal to or greater than the equivalent to six thousand four hundred twenty times the minimum wage in force in the Federal District ($400,158.60 pesos).
i) The regular or professional providing of land vehicle armoring services, new or used, as well as of real estate, for an amount equal to or greater than the equivalent to two thousand four hundred ten times the minimum wage in force in the Federal District ($150,215.30 pesos).
They will be subject to a Notice to SHCP when the amount of the act or operation is equal to or greater than the equivalent to four thousand eight hundred fifteen times the minimum wage in force in the Federal District ($300,118.95 pesos).
j) The regular or professional providing of services of transfer or custody of money or securities with exception of those in which the Bank of Mexico and institutions dedicated to securities deposit are involved.
They will be subject to a Notice to SHCP when the transfer or custody is for an amount equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District ($200,079.30pesos).
k) The providing of professional services, independently, without an employment relationship with the respective client, in those cases in which any of the following operations is prepared for a client or is carried out on behalf and in representation of the client:
The purchase and sale of real estate or the assignment of rights over them;
The administration and management of securities or any other assets of their clients;
The management of bank, savings or securities accounts;
The organization of capital contributions or any other type of resources for the creation, operation and administration of commercial companies, or
The incorporation, spin-off, merger, operation and administration of legal entities or corporate vehicles, including the trust and the purchase or sale of commercial entities.
They will be subject to a Notice to SHCP when the provider of those services carries out, on behalf and in representation of a client, any financial operation of the latter related to the above mentioned operations, with respect to professional secrecy and the right to a defense.
l) The providing of services of official certification. In the case of the intervention of notaries public in:
The transfer or creation of in rem rights over real estate, except for the guarantees created in favor of institutions of the financial system or public housing bodies. They will be subject to a Notice to SHCP when the price agreed, the cadastral value or the commercial value of the property, whichever is higher, or the guaranteed amount for principal, is equal to or greater than the equivalent to sixteen thousand times the minimum wage in force in the Federal District ($997.280 pesos).
The granting of powers for acts of administration or dominion granted irrevocably; these operations will always be subject to a Notice to SHCP.
The incorporation of legal entities, their change in assets resulting from a capital increase or decrease, merger or spin-off, as well as the purchase and sale of shares and partnership interests, will be subject to a Notice to SHCP, when done for an amount equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage in the Federal District ($500,198.25 pesos).
The creation or modification of trusts transferring ownership or guarantees on real estate, except those that guarantee a credit in favor of institutions of the financial system or public housing bodies, will be subject to a Notice to SHCP when the operations are done for an amount equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage in force in the Federal District ($500,198.25 pesos);
The execution of loan or credit agreements, with or without guarantee, in which the lender is not part of the financial system or is not a public housing body, will always be subject to a Notice to SHCP.
¾ In the case of the intervention of commercial notaries public in:
The carrying out of appraisals on assets with a value equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage in force in the Federal District ($500,198.25 pesos).
The incorporation of commercial entities, their change in assets resulting from an increase or decrease of capital, merger or spin-off, as well as the purchase and sale of shares and partnership interests of commercial entities.
The incorporation, modification or assignment of trust rights, in which according to the applicable law they can act.
The execution of commercial loan or credit agreement in which under the applicable law they can act and in which the lender does not form part of the financial system, will be subject to a Notice to SHCP.
These activities considered vulnerable in which commercial notaries public intervene will always be subject to a Notice to SHCP.
¾ In the case of public servants to which the laws confer the authority to give official certification in the exercise of their duties established in the corresponding legal provisions, when they intervene in the carrying out of vulnerable activities.
m) The reception of donations by non-profit associations and companies, for a value equal to or greater than one thousand six hundred times the minimum wage in the Federal District ($100,039.65 pesos).
They will be subject to a Notice to SHCP when the amounts of the donations are for an amount equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District ($200,079.30).
n) The providing of foreign trade services as customs agent or representative, through authorization granted by SCHP to promote for another the dispatch of merchandise in the different customs regimes in the case of the following merchandise:
Land, air and maritime vehicles, new and used, whatever the value of the goods. They will be subject to a notice to SHCP.
Machinery for betting games and lotteries, new and used, whatever the value of the goods. They will be subject to a notice to SHCP.
Equipment and materials for the production of payment cards, whatever the value of the goods. They will be subject to a notice to SHCP.
Jewelry, watches, precious stones and metals, whose individual value is equal to or greater than the equivalent to four hundred eighty-five times the minimum wage in force in the Federal District ($30,230.05 pesos). They will be subject to a notice to SHCP.
Works of art, whose individual value is equal to or greater than the equivalent to four thousand eight hundred fifteen times the minimum wage in force in the Federal District ($300,118.95 pesos). They will be subject to a notice to SHCP.
Ballistic resistance materials for providing vehicle armoring services, whatever he value of the goods. They will be subject to a notice to SHCP.
o) The creation of personal rights of use or enjoyment of real estate for a monthly value greater than the equivalent to one thousand six hundred five times the minimum wage in force in the Federal District, on the date on which the payment is made or the obligation complied with ($100,039.65 pesos).
They will be subject to a notice to SHCP when the amount of the monthly act or operation is equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District ($200,079.30 pesos).
The Law also contemplates acts or operations that are carried out for amounts less that those indicated above which will not give rise to any obligation, however, if a person carries out acts or operations for a cumulative sum in a period of six months that surpasses the amounts established in each premise for the formulation of Notices to SCHP, it may be considered an operation subject to the obligation to present it for purposes of the Law.
The SHCP may determine by general provisions the cases and condition in which the activities subject to supervision will not be subject to notice, provided they have been carried out through the financial system.
Obligations of Financial Entities
In the case of Financial Entities, they will be governed by their provisions and by the laws that regulate them specifically, and the acts and operations they carry out in terms of these laws will be considered Vulnerable Activities (e.g. the reports of cash deposits), and therefore they will have the following obligations:
To establish measures and procedures to prevent and detect acts, omissions or operations that could fall under the premises of operations with resources of unlawful origin and identify their clients and users.
Present before SHCP the reports on acts, operations and services that they carry out with their clients and that members of the board of directors, representatives, executives and employees of the entity carry out that could fall under operations with resources of unlawful origin.
Deliver to the SHCP information and documentation related to the acts, operations and services that could fall under the premises of operations with resources of unlawful origin.
Preserve, (at least ten years), the information and documentation relative to the identification of their present and former clients and users, as well as those acts, operations and services reported.
The supervision, verification and oversight of compliance with the obligations will be carried out by the National Banking and Securities Commission, the National Insurance and Bonds Commission, the National Retirement Savings System Commission or the Tax Administration Service.
Use of Cash and Metals
The Law prohibits complying with obligations and liquidating or paying, as well as accepting the liquidation or payment, of acts or operations through the use of coins and bills, in national currency and precious metals (gold, silver and platinum) in the case of:
a) Creation or transfer of in rem rights over real estate for a value equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage in force in the Federal District, on the day the payment is made or the obligation complied with ($500,198.25 pesos).
b) Transfers of ownership or creation of in rem rights over vehicles, new or used, whether air, maritime or land for a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in the Federal District on the day the payment is made or the obligation complied with ($200,079.30 pesos).
c) Transfer of ownership of watches, jewelry, precious metals and precious stones, whether by piece or by lot, and works of art, for a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District, on the day the payment is made or the obligation complied with ($200,079.30 pesos).
d) Acquisition of tickets that permit participation in betting games, contests or lotteries, as well as the delivery or payment of prizes for having participated in such betting games, contests or lotteries for a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District, on the day the payment is made or the obligation complied with ($200,079.30 pesos).
e) Providing the service of armoring for new or used vehicles, whether air, maritime or land or for real estate for a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District, on the day the payment is made or the obligation complied with ($200,079.30 pesos).
f) Transfer of ownership or creation of rights of any kind over the certificates representing partnership interests or shares of entities for a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District on the day the payment is made or the obligation is complied with, ($200,079.30 pesos).
g) Creation of personal rights of use or enjoyment of any of: real estate, vehicles and services of armoring whether new or used, air, maritime or land; for a value equal to or greater than the equivalent to three thousand two hundred ten times the minimum wage in force in the Federal District, monthly services of armoring for new or used vehicles, whether air, maritime or land ($200,079.30 pesos).
For the Certifying Public Officials, the Law establishes the following specific obligations in the use of cash and precious metals:
a) In the instruments recording any of the acts or operations indicated in the restrictions on the use of cash and metals, they shall:
Identify the form in which the obligations derived from them are paid when the operations have a value equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage in force in the Federal District ($500,198.25 pesos).
In case the value of the operation is less than the above mentioned amount, or when the act or operation has been totally or partially paid prior to the signing of the instrument, the declaration under oath by the clients or users will be sufficient.
b) In the cases different from those indicated and when it involves acts or operations restricted for the use of cash and metals (except for the creation or transfer of in rem rights over real estate for a value equal to or greater than the equivalent to eight thousand twenty-five times the minimum wage),they shall be formalized by the issuance of the certificates, invoices or guarantees that correspond, or of any other document recording the operation, and they will be verified following identification of those carrying out the act or operation, as well as any Controlling Beneficiary [1]. In such documents the form of payment must be specified and the respective receipt attached.
Powers and Obligations of the Authorities
Just as the Law creates concepts and imposes obligations on subjects who engage in Vulnerable Activities, it also gives powers to the authorities to be able to reach the objectives established therein.
In view of the above, it establishes the power of the SHCP to investigate ex officio and at any time compliance with the obligations that those who engage in Vulnerable Activities must comply with, through verification visits, for which the obligated subjects must provide exclusively the information and supporting documentation they have, that is directly related to the Vulnerable Activities. The visits will be carried out in accordance with the Federal Administrative Procedures Law and may only cover those acts or operations considered Vulnerable Activities carried out within five years immediately prior to the date of initiation of the visit, and therefore the powers that are granted are limited, thereby diminishing the possibility of their abuse.
However, the SHCP is not the only authority that is authorized to intervene; in the case of crimes identified by the Federal Criminal Code, the Specialized Unit in Financial Analysis of the Attorney General’s Office is created, the head of which will be considered an agent of the Federal Public Prosecutor. Such Specialized Unit may use the investigation techniques and measures established in the Federal Criminal Procedures Code and the Federal Law Against Organized Crime, for which it will have powers such as the following:
Request information from the SHCP;
Establish the criteria for presentation of the reports that SHCP prepares on financial operations that can be linked to schemes of operations with resources of unlawful origin;
Design, integrate and implement systems and mechanisms of analysis of the financial and accounting information;
Generate its own tools for purposes of investigating patterns of conduct that could be related to operations with resources of unlawful origin;
Establish mechanisms of direct consultation of information that may be related to operations with resources of unlawful origin, in the databases of the authorities of the three branches of government;
Conduct the investigation for obtaining signs or evidence linked to operations with resources of unlawful origin in accordance with and coordinating with the Specialized Unit established in the Federal Law Against Organized Crime when it involves investigations in that area, and
Request reports, documents, opinions and elements of evidence in general from the agencies and entities of the public administration of three branches of government, and from other authorities, autonomous public bodies, including constitutional ones, and those persons responsible for giving Notices to the organizations with Activities subject to supervision. In all cases, these requirements must be made in the framework of a formally initiated investigation, and on individuals and facts established in a preliminary investigation. In the case of Financial Entities, the requests for information, opinion and evidence in general will be made through the SHCP.
It is important to emphasize that the Notices presented by those obligated to do so will in no case have, in themselves, full probatory value. The Federal Public Prosecutor under no circumstance may base his investigation exclusively on the Notices, and therefore it will be based on the evidence that proves the act or operation reported in the Notices.
Administrative Sanctions
The SHCP will administratively sanction those who violate the Law. Violations by Financial Entities of their obligations will be sanctioned by the respective de-concentrated bodies of the SHCP authorized to supervise their compliance. The fines will have the nature of tax liabilities and they will be established in a liquid amount, being subject to the administrative procedure of execution established in the applicable law.
a) The applicable fines will be:
¾ Fine equivalent to two hundred and up to two thousand days of general minimum wage in force in the Federal District for anyone who:
Abstains from complying with the request made to them by SHCP.
Does not comply with any of the general obligations established in article 18 of the Law.
Does not comply with the obligations to present the Notices on time, when the presentation of the Notice is made no later than within thirty days following the date on which it should have been presented.
Does not comply with the obligation to present the Notices without meeting the requirements of article 24 of the Law.
¾ Fine equivalent to two thousand and up to ten thousand days of general minimum wage in force in the Federal District if the specific obligations imposed in article 33 of the Law in the use of cash and metals are violated by the certifying public officials.
¾ Fine equivalent to ten thousand and up to sixty-five thousand days of general minimum wage in force in the Federal District, or from ten to one hundred percent of the value of the act or operation, when they are quantifiable in money, whichever is greater, when:
The Notices referred to in article 17 of the Law are not presented.
They participate in any of the acts or operations prohibited in relation to the use of cash and metals established in article 32 of the Law (in cases in which it is prohibited to comply with obligations through coins, bills and precious metals).
b) The SHCP will abstain from sanctioning the violator, on one occasion only, if it involves a first violation, provided it complies spontaneously and prior to the initiation of the powers of verification with the obligation and expressly recognizes its failure to comply.
c) Causes are established for revocation of the permits for games and lotteries, in addition to those indicated in the applicable legal provisionsfor repeating the failure to comply with the obligations established or for failing to present the notices or for participating in any of the acts or operations prohibited in relation to the use of cash and metals; the respective notice will be given to the Ministry of the Interior.
d) It establishes causes for definitive cancelation of the right to practice of the commercial notary for repeated non-compliance with the obligations established; the ruling will be notified to the Ministry of Economy and it will be asked to definitively cancel the right to practice of the commercial notary that has been sanctioned; the Ministry of Economy will have a period of ten business days to do so.
e) When the violator is a Notary Public, the SHCP will inform the competent authority to supervise the notarial function, so that it cancels the right to practice of the violator and the consequent revocation of his license, following a procedure that the legal provisions governing his practice establish.
The revocation will be applied notwithstanding the other fines or sanctions that may be applicable, for being considered notorious deficiencies in the exercise of his duties: the repetition of the failure to comply with the established obligations, failure to present the notices or for participating in any of the acts or operations prohibited in relation to the use of cash and metals.
f) Causes for cancellation of the authorization to the customs agents and representatives are also established. The administrative sanctions may be challenged in SHCP itself, through the motion for review established in the Federal Administrative Procedure Law or directly in the Federal Court of Tax and Administrative Justice through the administrative law proceeding.
Crimes
Furthermore, this law establishes the possible commission of crimes according to the following:
a) Anyone who engages in the following will be sanctioned with prison from two to eight years and with five hundred to two thousand days of fine:
Knowingly or in a malicious way provides to those who must give Notices, information, documentation, data or images that are false, or are completely illegible, to be incorporated in those to be presented, and
In a malicious way, modifies or alters information, documentation, data or images to be incorporated into the Notices, or incorporated into notices presented.
A sanction of prison for four to ten years and five hundred to two thousand days of fine will be imposed on:
The public official of any of the agencies or entities of the federal public administration, of the Federal Judicial Branch, of the Attorney General or of the autonomous constitutional bodies that unduly use the information, data, documentation or images to which he has access or receives for purposes of this Law, or that transgresses the provisions regarding the preservation and handling of information, and
Anyone who, without having authorization from the competent authority, reveals or discloses, by any means, information that links an individual or entity or a public official with any Notice or request for information made between authorities, in relation to any act or operation related to the Vulnerable Activities, regardless of whether the Notice exists or not.
b) The penalties established will be doubled if the person committing the unlawful act is, at the time of committing it or in the two years prior to committing it, a public official responsible for preventing, detecting, investigating or judging crimes; a sanction will also be applied prohibiting the individual from serving as a public official for a time equal to the prison time that has been imposed, which will begin to run from when the prison time has ended.
Transitory Provisions
The Law will enter into force after nine months from the date of its publication in the Official Federal Gazette (in August 2013).
The Federal Executive will issue the Regulation within thirty days after the entrance into force of the Law.
The provisions regarding the obligation to present Notices, as well as the restrictions on cash, will enter into force sixty days after the entrance into force of the Regulation of the Law.
The Notices will be presented, the first time, upon the entrance into force of the Regulation of the Law.
The Notices that must be presented by those who engage in Vulnerable Activities will continue to be presented according to the terms established in the Law and general provisions that specifically apply to them.
The Vulnerable Activities that have been executed prior to the entrance into force will be governed by the legal provisions applicable and in force at the time they occurred.
We hope this information has been useful and would be glad to answer any questions you may have.
Sincerely, Sámano Abogados, S.C.
[1]Controlling Beneficiary, the person or group of persons that: a) Through another or any act, obtains the benefit derived from them and is the one who, in the last instance, exercises the rights of use, enjoyment or disposal of a good or service, or b) Exercises control of that entity that, as client or user, carries out the acts or operations with whom it carries out Vulnerable Activities, as well as the persons for whom it enters into any of those. It is understood that a person or group of persons controls an entity when, through the holding of securities, by contract or any other act, it can:
Impose, directly or indirectly, decisions on the general shareholders assembly or partner meetings or equivalent bodies, or appoint or remove the majority of the board members, administrators or their equivalent;
Maintain the ownership of the rights that allow it, directly or indirectly, to exercise the vote with respect to more than fifty percent of the corporate capital, or
Direct, directly or indirectly, the administration, the strategy or the main policies thereof.