The EU considers that, despite the new law, the FGR is ineffective against asset forfeiture and money laundering

Although he recognized that in 2019 President Andrés Manuel López Obrador had promulgated a law against false invoices and a reform to National Domain Forfeiture Law In order to make the confiscation of assets linked to crime effective, the United States Department of State observed that the actions of the Attorney General of the Republic (FGR) in prosecuting and obtaining a sentence in cases of money laundering and asset forfeiture were ineffective.

In his report on Narcotics Control, the United States Department of State recognized that proceeds from the illegal drug trade leaving the United States are the main sources of funds laundered through the Mexican financial system. “Mexican transnational criminal organizations launder funds using a variety of methods.

The TBML (Trade Based Money Laundering for its acronym in English) involves the use of illicit proceeds in dollars to purchase retail items or services for export and resale in Mexico or the United States,” he said.

The document recognized that although reforms to the Organic Law of the Federal Public Administration were published in Mexico; the Federal Law for the Administration and Disposal of Public Sector Assets, and the Seventh Transitory Article of the Decree by which the National Asset Forfeiture Law is issued, to facilitate that the confiscation of assets pass to the Institute to Return the Stolen to the People , the FGR continues to be limited in matters of money laundering and asset forfeiture.

He mentioned as a factor that limits the processing of complaints in Mexico is the resolution of the Supreme Court of Justice of the Nation (SCJN) that prevents the Financial Intelligence Unit (FIU) from freezing bank accounts.

“In 2017, the Supreme Court ruled that the freezing of accounts of the Financial Intelligence Unit (FIU) violates constitutional protections and due process rights. The FIU can still freeze accounts when an international request for legal aid is submitted,” he mentioned.

“While the authorities acknowledge the abuse of certain sectors by money launderers, responses are limited by corruption and a lack of capacity. The government has not yet provided the number of convictions for 2019. The Money Laundering Unit de la FGR obtained 10 money laundering convictions in 2019, compared to six convictions in 2018, according to open reports. The file tracking system of the Judiciary of the Federation of Mexico recorded six cases that resulted in guilty pleas and five that ended in trial in 2019. The data does not indicate whether the trials resulted in convictions. The lack of convictions in money laundering cases is representative of Mexico’s limited ability to prosecute crimes in general.

“In August 2019, the president signed into law a non-conviction asset forfeiture law to allow prosecutors and law enforcement agencies to seize illicit assets more aggressively. The new law also adds corruption and money laundering as predicate offences. Subsequently, the FGR created a new Asset Forfeiture Specialized Unit to continue with all federal forfeiture actions. In August 2020, the FGR filed its first three federal forfeiture proceedings. The complaints were filed before Mexico’s only federal forfeiture judge (plans are pending to add more forfeiture judges) and have not yet been scheduled for an initial hearing. There are additional state-level asset forfeiture judges considering cases across the country, but no forfeiture issues have yet been resolved under the new law,” he recounted.

Given this situation, the report detailed, the Mexican authorities in charge of investigating and prosecuting financial crimes continue to struggle to achieve trials.

“Money laundering crimes continue as the government works to prosecute financial crimes and seize or forfeit assets. To increase the number of convictions for financial crimes, the government needs to combat corruption and improve investigative and prosecution capacity. New legislation passed in 2019 expands predicate offenses and makes separate procedures for asset forfeiture, but legal challenges to the law have hampered the ability of the Attorney General’s Office (FGR) to obtain a conviction under the legislation,” he said. .

Reveals how and where money is laundered in Mexico

The report from the United States Department of State highlighted that illegal actors launder billions of dollars annually through the Mexican financial system, the product of corruption, drug trafficking, smuggling, extortion, fuel theft, fraud, human trafficking, and drug trafficking. Firearms.

“Mexican authorities have had some success investigating and blocking accounts of suspected money launderers, but have shown limited progress in successfully pursuing the money laundering and other financial crimes. Two Supreme Court rulings in 2017 continue to complicate Mexico’s ability to counter illicit financial activities,” he noted.

He explained that illicit actors in Mexico invest both in traditional financial assets and in properties and businesses. “Money laundering through the luxury real estate sector remains a concern, especially as a vehicle to launder the proceeds of public corruption. There are two popular laundering methods: structuring cash deposits and using funnel accounts,” he said.

He added that the laundering organizations continue to carry out “mirror transactions” (replica or copy of the same bank account), and drug proceeds are also laundered through exchange houses without an operating license.

He noted that Mexico’s main banking regulator, the National Banking and Securities Commission (CNBV), has a special unit to investigate unlicensed exchange houses. “Mexican authorities have been increasingly monitoring the potential for criminal exploitation of financial technology, including virtual currencies,” she highlighted.

The report recognized the promulgation in 2019 in our country of the law against false invoices, in addition to the so-called Ley Fintech to regulate the new electronic commerce.

“The CNBV regulates the operations involved in electronic payments, exchange of virtual assets and cryptocurrencies. Critics argue that the law’s secondary regulations allow for additional money laundering vulnerabilities, because they go too far in liberalizing financial markets,” he posed.

jorge.monroy@eleconomista.mx