Mexico fails to avoid “false declaration” at customs; advances in international anti-money laundering cooperation: FATF

One of the weak points for Mexico in terms of combating money laundering Y terrorist financing is the lack of a strategy by the customs authorities to address cross-border operations that may be related to money laundering and financing of terrorism.

This was determined by International Financial Action Task Force (FATF) against money laundering and financing of terrorism within a follow-up report, presented this Thursday, May 12, on the actions that Mexico has taken to combat the money laundering since its evaluation published in 2018.

In said report, the FATF was critical of the lack of effectiveness that the country has regarding recommendation 32 of the organization, related to the transport of cross border moneyeither in cash or in bearer negotiable securities.

“Mexico has not made any changes to its laws or processes to address the deficiencies identified in relation to false declarations (at customs). Mexico has also not improved the powers of its customs authorities,” the agency said in its most recent report.

Recommendation 32 of the agency suggests that all countries should have measures in place to detect the cross-border physical transportationof currency or negotiable instruments, through a declaration system.

“Countries should ensure that their competent authorities have the legal authority to detain or restrict currency or bearer negotiable instruments suspected of being related to the terrorist financingthe money laundering or predicate offences, or that are falsely declared or revealed”, dictates the recommendation and adds that effective, proportional and dissuasive sanctions must be provided for those who falsify said declarations.

In this sense, the FATF pointed out that false declarations in Mexican customs with indications of laundering or financing of terrorism, of amounts equivalent to 10,000 dollars to 30,000 dollars, do not carry effective, proportional, or dissuasive sanctions.

The agency stressed that although Mexico provides mechanisms in its National Strategy to Combat Money Laundering and Financing of Terrorism to establish processes for the retention of relevant information in customs, as well as to facilitate international cooperation when there is suspicion of money laundering or terrorist financing, the procedures carried out by customs authorities and other authorities remain unclear.

Given this scenario, the FATF decided not to change the rating granted to Mexico with respect to recommendation 32, which in the 2018 evaluation registered it as partially compliant.

Improvement in international cooperation

Among the favorable points for Mexico in this latest follow-up report, the progress that the country has made in terms of international cooperation to combat money laundering Y terrorist financingso the agency decided to improve the country’s qualifications in this regard.

According to the report, since the group’s most recent evaluation of Mexico, the country has established formal agreements to facilitate international cooperation in cases of possible money laundering and financing of terrorism.

“Since the 2018 evaluation of Mexico’s measures to combat money laundering and the financing of terrorism and its 2021 follow-up report, the country has taken a series of actions to strengthen its framework,” the report reads.

According to the report, the country has a clear legal basis to accommodate, rather than deny, the execution of an international request for legal assistance when its application could prejudice or impede an investigation or Judicial procedement.

In this context, FATF decided to reclassify Mexico’s evaluation regarding recommendations 37 and 38, to qualify them from partially compliant to compliant.

Mexico, being an active member of FATF It must comply with the 40 recommendations of the agency in terms of combating money laundering and financing of terrorism. In this context, the country currently fully complies with 10, to a great extent with 22, partially with 7, and only does not comply with one recommendation.

The authority that is responsible for Mexico before the FATF is the Financial Intelligence Unit of the Ministry of Financea.

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